Honda Prices New Insight Hybrid Under $20,000 Undercuts Toyota Prius

DETROIT, March 10, 2009; Kevin Krolicki writing for Reuters reported that Honda Motor Co on Tuesday set the base price for its Insight hybrid at 10 percent below the market-leading Prius hybrid made by larger rival Toyota Motor Corp.

Honda said the 2010 Insight would start at $19,800, making it the first hybrid to sell in the U.S. market below $20,000. The 2009 model Prius starts at $22,000.

Honda has positioned the five-door Insight as an economical alternative to the Prius, which has come to dominate the hybrid market with its distinctive styling and fuel economy.

"I think what they are looking to do is to bring a new buyer to the marketplace for hybrids, people who are interested but maybe couldn't afford the Prius," said Jack Nerad, analyst at Kelley Blue Book, a leading vehicle pricing guide.

Honda launched the first hybrid in the U.S. market with its three-door hatchback Insight a decade ago but its early launch was eclipsed by the commercial success of the larger Prius.

The all-new Insight revives the name of the earlier hybrid and represents Honda's attempt to engineer a "Prius-killer," a more affordable hybrid that chips away at the price premium such vehicles require to offset the cost of additional batteries and an electric-drive system, analysts have said.

"I think it's clear that they want to make this seem like a more attainable vehicle," said Karl Brauer, editor of auto tracking Web site Edmunds.com. "I think they're doing what it takes to make hybrids seem more real world and less niche."

Toyota sold almost 159,000 Prius hybrids in the United States in 2008. Sales were constrained at one point during the summer spike in gas prices by difficulty importing enough of the cars from Japan.

Toyota has not announced pricing for its all-new 2010 model Prius that is expected to hit U.S. showrooms later this year.

The Prius leads the Insight in fuel economy with an estimate of 46 miles-per-gallon in city-and-highway combined driving, compared with 41 miles per gallon for the Honda model.

The Insight debuted in February in Japan, outselling the Prius there in its first month of availability. The new Honda hybrid is set to go on sale in the United States this month.

Editing for Reuters by Ted Kerr