Toyota and Honda have experienced a surge in demand for hybrid vehicles in their home market over the past two years thanks to generous government incentives for "eco cars." The Toyota Prius has been the top-selling vehicle for more than a year and even the oft-derided Honda Insight has sold beyond expectations. Unfortunately for the automakers involved, those incentives end in October and with the expected drop in sales, Toyota is reportedly planning to cut domestic production.

The Japanese Kyodo news agency reports that Japan's largest automaker will cut production from its current 14,000 vehicles a day to fewer than 12,000 in the final quarter of the year. The automaker does expect sales to recover later in the year and has maintained its production target for the full fiscal year.

[Source: Reuters]