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Honda scored just six points last year, all courtesy of Briton Jenson Button, with the ill-handling RA107 after finishing fourth overall in 2006 when Button also won the Hungarian Grand Prix.
"The whole design philosophy of the car is just completely different," said chief executive Nick Fry after Austrian test driver Alexander Wurz drove out the RA108 at the team's headquarters.
"It is different in every respect, the thinking behind it is different and by the time we get to Melbourne every component on the car will be different to what we had on the car last year."
Major changes have been made in the last six months, including the appointment in November of former Ferrari technical director Ross Brawn as team boss.
However the line-up of Button and Brazilian veteran Rubens Barrichello remains the same while the livery builds on last year's 'Earth Car' concept.
Brawn encouraged
Brawn, the master tactician who helped Germany's Michael Schumacher to seven world titles with Benetton and Ferrari, said he was encouraged by what he had seen so far.
"The team obviously had a very difficult year last year and I think they've had an extremely intelligent response to the problems they had," he said.
"The primary difficulty with last year's car was that it produced a lot of downforce but in a very aggressive way, the car was very sensitive to pitch and roll. So it made it extremely difficult for the drivers to use.
"The focus with this car was to make sure that we produced the aerodynamic downforce in a much more friendly, more usable way."
Brawn said the chassis had been slimmed down but the car on display on Tuesday would undergo a dramatic change in appearance before the opening race of the season in Melbourne on March 16.
"For a new car, touch wood, it had fewer problems than any I have experienced in recent years. So I was very pleased with the first running of the car," he added.
Button said the team's main aim was to improve race by race compared to the competition. Only then could they set their sights on anything higher.
"The final aim has to be to challenge for the world championship, that is everyone's aim in Formula One and for us it is definitely possible," he said looking beyond 2008.
"That's my personal aim... hopefully sooner rather than later but first of all we have got to work with this car."
The RA108 continued the environmental awareness program started by the team last year when the car competed with a picture of the world instead of brand names.
This year's model will bear the words "earthdreams" to shift the focus to individual projects. Fry said Honda had donated $700 000 to various environmental organisations in recent weeks with a further $500 000 to be paid out shortly.