According to a report coming from Japan's Nikkei newspaper, Honda aims to price the base Fit Hybrid at 1.5 million yen ($16,570 at the current exchange rate) when it debuts later this fall in Japan. If the price holds true, the Honda Fit Hybrid will becomes the country's cheapest hybrid available, undercutting its nearest competitor, the Honda Insight, by about $4,500 and besting the Toyota Prius by nearly $8,000.
As Reuters reports, Honda's price for the Fit Hybrid is significantly lower than industry analysts had expected. Honda's decision to drop the Fit's price may spark a hybrid price war. As we've learned before, Honda's willingness to price its hybrids below the competition has forced other automakers to respond with some price slashing of their own. Reuters suggests a price war could lead to low profit margins for hybrid vehicles, which in turn could drive some automakers right out of the hybrid market. While price wars are generally beneficial to buyers, a lack of competition in the hybrid market would severely hamper our dreams of a larger, greener automotive market.