2010 Toyota Prius - Click above for a hi-res gallery

Toyota may have gotten used to being the leader in the hybrid sedan segment, but the Japanese auto giant didn't get to where it is today by failing to see the writing on the proverbial wall. With arch-rival Honda having priced its new Insight hybrid lower than the current Prius, Toyota is responding in kind by dropping its domestic market sticker price on the upcoming new Prius to match.

According to reports coming out of Japan, Toyota recently notified its JDM dealers that the price for the new Prius would be set at 2.05 million yen, which equates to about $20,750 in U.S. Dollars. On this side of the Pacific, the Honda Insight went on sale last month with a starting price of $20,470, putting the two on equal footing price-wise, while the Prius arguably brings more to the table with more space and better fuel economy. A fully-loaded new Prius can quickly reach above $30k, indicating that Toyota hopes to lure away buyers with the low sticker price in the hope that they go for pricey options. But in a double-pronged attack, Toyota intends to keep the outgoing Prius on the Japanese market at a significantly reduced price of 1.89 million yen ($19,130). Pricing for the United States has yet to be announced, but if Toyota follows the same model here as it reportedly has in its home market, the fight could get very aggressive.

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[Source: Automotive News – subs. req'd]