(FORTUNE Magazine) – After building sales in the U.S. with the help of hefty rebates earlier in the year, Honda is now trying to revive its sagging fortunes back home with an itsy-bitsy sports convertible called the Beat. Less than 11 feet long and just 4 1/2 feet wide -- slightly smaller than Mazda's Miata -- the Beat is already selling well in Japan, where Honda has been losing sales and market share. The problem: Competitors like Nissan have been quicker off the mark with stylish family sedans and luxurious big cars, while Daihatsu, Mitsubishi, and Suzuki have been turning out hit minicars. Honda President Nobuhiko Kawamoto complains that the automaker has become ''flabby.'' He says the Beat will burnish the company's image at home and boost corporate morale. That's a tall order for a two-seater with just enough storage space for a purse and a newspaper. Says Steve Usher, deputy general manager at Kleinwort Benson Securities in Tokyo: ''It's purely a toy. But Honda needs to get its image as an innovator back on track.'' Ah, but what a toy. The basic Beat sells for just $10,400, vs. $12,600 for a basic Miata. Buyers can load the car with another $4,500 in options, including an Italian-designed leather-covered steering wheel and gearshift, an air bag with U.S.-made sensors, and Honda's own Sky Sound 120-watt audio system with four speakers. An automatic control turns up the volume when you enter a noisy tunnel. If you leave the car with the top down and it rains, no problem: The audio equipment is water resistant. Don't expect to see the Beat in U.S. showrooms. Honda says that it has no plans to export the car -- yet.