Toyota stung by Honda Insight's success

TOYOTA is scrambling to come up with a cheaper hybrid model after Honda scored a hit in Japan with its Insight.

Reports in the Japanese business press suggests Toyota will rush out another hybrid model by early 2011 to tackle the Insight, which was released little more than a month ago.

The Insight is the cheapest hybrid yet launched in Japan and initial sales have trebled Honda’s forecasts.

Orders received in February reached 18,000 in Japan, compared with Honda’s monthly sales target of 5000 Insights.

The Insight sells for ¥1.89 million ($A29,298), significantly below the ¥2.33 million ($A36,119) list price of the Prius.

Left: Honda Insight.

It is not clear from the reports, which quote unnamed Toyota sources, if Toyota is planning a new car or just a stripped-out version of the new Prius.

The new Prius is expected to be cheaper than the current model, but is expected to still cost more than the Insight.

A report in the Yomiuri Shimbun newspaper indicated the projected cheaper hybrid would be a new Prius with minimum levels of standard trim.

However, a report in the Nikkei business daily newspaper indicated Toyota was planning to develop a new hybrid that would be 20 to 30 per cent cheaper than the Prius and be priced below the ¥2 million ($A31,000) threshold.

The Nikkei report suggested that the new Toyota hybrid would be a sub-compact and would have an ICE smaller than the 1.5-litre engine in the current Prius. The new Prius about to be launched will have a 1.8-litre engine.

This could mean Toyota is contemplating an expensive move to adopt the simpler “power assist” technology for the new low-price hybrid rather than its more complex, more expensive Hybrid Synergy Drive (HSD) technology.

The HSD system allows the vehicle to be powered either by the internal combustion engine or the electric motor or both at once. This requires a more powerful motor and larger batteries than those in the Honda Insight.

In Honda’s “power assist” hybrid system, the petrol engine always runs and is assisted during acceleration by the electric motor.

The “power assist” system does not quite match the HSD fuel economy levels, but is cheaper to produce.

Another cost factor centres on the battery pack. Honda uses proven nickel-metal hydride cells to store the Insight’s electricity, whereas Toyota uses the more expensive lithium-ion cells in the Prius.

Toyota has declined to make an official comment on the newspaper reports.

A spokesman for Toyota Australia said the company had sought clarification of the speculation from Japan, but had not yet had a reply.