Toyota Plans Cheaper Hybrid to Compete with Honda's Insight

Just like we told you yesterday, Toyota is the first hybrid manufacturer in the United States that reached the 1 million sold units milestone and, even if this sounds like encouraging news, it's actually not. Toyota will face the toughest competition it could get in the United States as Honda prepares to launch the Insight, also referred to as the cheapest hybrid in this side of the market.

Cheaper usually means more attractive, especially when taking into account the economic mayhem that pushed people towards low-cost, environmentally-friendly and less-polluting cars. However, Toyota isn't surprised at all and says it has the best weapon to counteract Honda's market strategy: an even cheaper hybrid!

A report published in the Nikkei business daily informs that Toyota will debut a new gasoline-electric car model as early as 2011, with pricing likely to start at 2 million yen (around $20,510). To refresh you memory, the most affordable Insight costs $19,800 in the United States so Toyota's new hybrid will be actually a bit more expensive.

However, getting back to Toyota's new hybrid model, it will be obviously based on the current Prius generation but will be 20 to 30 percent cheaper, Reuters informed today citing the Japanese publication. Is that possible? you may ask. Well, it actually is, because Toyota will modify numerous parts currently installed on the Prius, including interior and exterior components.

Moreover, it may seem like the new hybrid will come in the form of a subcompact model with smaller-displacement engines compared to those of Prius - 1.5-liter. Toyota refused to comment the report but, taking into account other past rumors, this may be the first sign that there's some truth behind these words.