Honda is continuing to develop the 2012 Honda Fit Hybrid, a version of its popular and versatile subcompact that uses a mild-hybrid system with a smaller engine for even higher gas mileage.

Spy shots published by our sister site Motor Authority show the Honda Fit test car, complete with black tape over body panels, being tested in Germany near the Nürburgring.

2010 Honda Fit Sport

2010 Honda Fit Sport

2010 Honda Insight

2010 Honda Insight

2011 Honda CR-Z

2011 Honda CR-Z

The Fit Hybrid will be the third of three new Honda mild hybrid models that join the long-running Civic Hybrid, now in its seventh model year.

The 2012 Fit Hybrid will presumably use a powertrain similar to that of the 2010 Honda Insight, which includes a 1.3-liter engine and a 10-kilowatt electric motor.

Sales of the 2010 Honda Insight subcompact hybrid have been a disappointment, perhaps because at a base price of $19,800 before delivery, it costs $5,000 more than the 2010 Fit, which has more room inside and a more versatile interior.

Last year, Honda sold a total of 15,119 Civic Hybrids and 20,572 Insights in the U.S. market. That was less than half the number of Insights it hoped to sell, indicating that buyers may not see the Insight as a notable improvement over the Fit.

After the Insight comes the 2011 Honda CR-Z, a sporty hybrid two-seater that uses a larger 1.5-liter motor for better performance.

The CR-Z's stated performance isn't stellar, with 0 to 60 mph times of 9.7 seconds, and projected fuel economy ratings of 36 mpg city, 38 mpg highway with a continuously variable transmission (CVT).

The Fit Hybrid follows the CR-Z, as either a 2011 or 2012 model, though whether it makes it to the U.S. is another question.

The 2010 Honda Fit is a low-priced car in the States, whereas it's sold as a family vehicle in some Asian and European regions.

Several weeks ago, Honda executives said the value proposition for the Fit Hybrid would be a challenge. Perhaps it would do better in its home market, where the CR-Z is already smashing sales projections.

[Motor Authority]