These little runabouts are now faced with overcoming more than just traditional competitors. They are also fighting for sales with an unexpected entrant, the hybrid. In this example, the hybrid is not purchased for fuel efficiency alone, but as a symbolic message of the purchaser's greenness, or an object with bragging rights or for its exclusivity. The buyer expects others to notice that their vehicle is more than just basic transportation.
In the price range of a typically equipped Golf, you will find the Prius, a strong competitor. VW acknowledges the competition with Toyota and suggests that its vehicles offer a more emotionally involved experience and carry a stylish appeal absent with many of Toyota's products. Just in case you don't agree, VW offers the TDI engine option that returns hybrid-like gas mileage complete with green appeal and comparative rarity.
Differentiating yourself from the crowded market of upscale small cars is difficult but necessary for strong sales. As more compact hybrids enter the market, competition will become stiffer and segment leaders will face a new battle for the top spot.
[Source: Ward's Auto - sub. req.]