Toyota to offer cheaper Prius in Japan?

If reports in Japan prove to be correct, the battle between Honda’s new Insight and the Toyota Prius is about to get a little rougher. Today’s Nikkei newspaper is reporting that Toyota will offer a stripped down version of the current Prius for the Japan market at a price comparable with the Insight. The report make no mention of a similar strategy being used in the U.S. or other markets.

This has been rumored for a while, but this time the Nikkei, Japan’s biggest business daily, has quite a lot of details. It says that Toyota will cut the current price of the Prius in Japan from 2.33 million yen ($23,700) to 1.89 million yen ($19,300) for the lowest trim version. The Insight is on sale in Japan, starting from 1.98 million yen ($20,100). The report also claims that the cheaper Prius will continue to be sold even after the launch of the new third generation model in May. This follows reports last week in Japan that Toyota will follow Honda’s lead and introduce a cheaper, smaller hybrid in 2011.

Of course, if the reports are right, the risk for Toyota is that the older, cheaper Prius will eat into sales of the new version, which while superior will command a bigger price tag. With the Insight off to hot start in Japan, it seems Toyota is prepared to defend its hybrid lead by all means necessary.

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