Honda has already released the Insight in Japan and has already seen strong demand. They said yesterday that the Insight was selling at three times their expected rate.

Toyota said their new model would be offered at less than 2 million yen or $20,510 in order to be price competitive with the Insight.

Toyota is looking to launch the new brand by 2010 and they said it will be 20 to 30% cheaper than the Prius. The car will be a subcompact that will have a smaller engine than the current Prius which uses a 1.5 liter engine.

According to an article in Asahi Shimbun, Toyota plans on releasing a cheaper Prius in late 2009. They know they have to compete with the Insight, and plan on doing so by reducing the sticker price.

Honda said the Honda Insight hybrid vehicle is flying off the shelves. Orders are three times higher than their initial sales forecasts.

In Japan, the Honda Insight was 10th in sales for February while the Prius finished two places lower in 12th.

Honda recently announced the base price of the Honda Insight would start at $19,800. Prius currently stars at around $22,000.

Expect word of the lower prices on the Prius sometime in June 2009.

The model is aimed directly at the popular Toyota Prius. With a competitive price and advanced fuel efficiency, Honda Motor Co. thinks they may have created a “Prius killer.”

The Prius carries a base sticker price of $22,000. It looks as if Honda has decided to look for the value-oriented shoppers who are obviously concerned with both gas prices and total cost of ownership.

The Honda Insight is also $4,000 less than the popular Honda Civic. Honda plans on making hybrids an attractive alternative to even its own popular car lines. With several new lines coming in the hybrid lineups, this could be the year the hybrid vehicle comes of age.

The 2010 Toyota Prius will offer 50mpg combined gas mileage and will be available on US car lots in June.

The war of hybrids is on in earnest.

Honda plans to start selling the vehicle in the U.S. in April of this year.

One solution to make the car more affordable to produce would be to move production to America. Honda President Takeo Fukui said the company would do just that if sales volume in the States exceeds 100,000 units per year.

If Honda can keep the price around $20,000, it would still offer at least a 10% advantage against the popular Toyota Prius. With consumers being so price-conscious these days, that could be the difference between making a sale or not.

The Insight has already gone on sale in the Japanese market this week.

The Honda Insight is also expected to be the star of this year’s 2009 Melbourne Motor Show, which takes place from February 27th to March 9th.

“After pioneering hybrid motoring in Australia with the original Insight in 2000 and following this with two generations of Civic Hybrid, we are looking forward to showcasing our latest innovation in hybrid technology with the second generation Insight,” said Lindsay Smalley, Honda Australia’s Senior Director.

“This is one part of our vision to offer more hybrid motoring options to the Australian public,” Mr. Smalley said.