Japanese auto major Honda today said it will focus on India and China for

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future growth as sales in developed markets like the US and Europe continue to drag due to the global economic downturn.

The company has, however, ruled out entering the ultra low-cost car (ULC) segment in India unlike the Tatas and Bajaj Renault-Nissan but said it was working on a small car to address demand of the high volume segment in the country.

"Selling cars has become very difficult the world over, so we have to prioritise the market. Our top priority is China and India where we would like to grow as much as possible," Honda Motor Corporation's new President and CEO Takanobu Ito told reporters here.

Asked if the company was looking at entering the ULC segment to drive volumes, he replied in the negative.

"We believe that India is a market with great potential (but) we do not have any plans for an ultra low-cost car but we believe we can develop a product, which we can sell to various customer segments," he said.

The company's research and development division is working for such a product for Asian markets, in particular for the Indian market, he added.

"But I can't say when we will formally come out with this product. We are currently researching on a India small car, which has to be packaged to meet the requirement of Indian customers, Indian price-point while adhering to the Honda brand," he said, adding the car would be be smaller than current hatchback Jazz.