With the introduction of the Honda Insight, Toyota is facing the most serious challenge yet to its hybrid dominance in the decade since the Prius debuted. While the Insight's hybrid technology is not as sophisticated as Toyota's, it does get excellent fuel economy. More importantly, the Insight has a significant price advantage over the Prius. Given the serious new competition and the extremely difficult car sales market right now, Toyota has apparently decided to take up the fight. The automaker has apparently decided to cut the base price of the Prius by $1,000 to $21,000, only $1,200 more than the Honda.

In Japan, Toyota has decided to keep the previous generation Prius in production for a while to compete with the Insight on price. Toyota Communications VP told ABG in New York recently that the company evaluated the same option for the U.S. but decided against it. New OBD-II regulations would have required significant updates to the old Prius that would have negated any cost advantage. Thus we only get the new model but at a lower price point. Thanks to Jarret for the tip!


[Source: Bloomberg]

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