With the introduction of the Honda Insight, Toyota is facing the most serious challenge yet to its hybrid dominance since the Prius debuted. While the Insight's hybrid technology is not as sophisticated as Toyota's, it delivers excellent fuel economy, and more importantly, the Insight has a significant price advantage over the Prius. Given the threat and the current difficulties facing the auto market, Toyota has apparently decided to take up the fight by cutting the base price of the Prius by $1,000 to $21,000, only $1,200 more than the Honda.

Toyota's strategy in Japan was to keep the previous generation Prius in production to compete with the Insight on price. However, when we asked a Toyota spokesman in New York if the company evaluated the same option for the US, we were told Toyota decided against it due to new OBD-II regulations that would have required significant updates to the old Prius, negated any cost advantage. Thanks to Jarret for the tip!

[Source: Bloomberg]

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