New Japanese hybrids, plug-in coming

TOKYO -- The green car race between Toyota and Honda is heating up.

Toyota Motor Corp. plans a new small hybrid car to take on the Insight, the inexpensive Honda hybrid that just reached the United States.

The small gasoline-electric car being planned will be a low-priced spinoff of the Toyota Yaris, said Akihiko Otsuka, chief engineer of the redesigned, third-generation Toyota Prius.

"We are developing a low-priced hybrid vehicle like Honda's Insight," Otsuka said at a media event where reporters drove a final prototype of the next-generation Prius. "We are going to compete by expanding our hybrid vehicle lineup to smaller hybrids, in the class of the Vitz and Yaris." Otsuka did not say when the small hybrid will debut, but it could arrive as early as 2011, according to Japan's Nikkei business newspaper.

Toyota's plan is the clearest sign yet that the world's biggest automaker is worried about the inroads its domestic archrival is making into small, low-priced hybrid vehicles. Honda's Insight, starting at around $20,000, is selling briskly in Japan and will be followed by a hybrid version of the Fit compact.

By contrast, Toyota's third-generation Prius has a bigger engine and many options common to premium cars. The current, second-generation Prius is already more expensive than the Insight, at around $22,000. And the updated model is expected to be even pricier when it arrives in May in U.S. showrooms.

Otsuka said the small hybrid being developed will be cheaper than the Prius.