It is looking like Honda's recently updated Fit [Jazz] has knocked Toyota's Prius hybrid off its perch as leader of Japan's passenger car market in January for the first time in 20 months.

Overall vehicle sales in January, excluding minivehicles with engines of up to 660cc, tumbled 21.5% from a year earlier to 187,154 units, falling for the fifth consecutive month, the Japan Automobile Dealers Association said.

The sales rankings do not include minicars, but the Fit is likely to have become the front runner in January for the first time since December 2007 even if minivehicle data are included, industry sources told Kyodo News.

While sales of the Prius began falling year on year after the government subsidy programme to promote eco-friendly car purchases ended in September, Fit sales have been robust due to the launch in October of a new hybrid model with a starting price of JPY1.59m, the most inexpensive in Japan among vehicles powered by electric motors and petrol.

In January, Fit sales totaled about 15,000 units, up around 10% year on year, with Prius sales at some 14,000 units, down an estimated 40%, the sources said.

The Prius apparently lost some of its potential buyers to Toyota's new, fuel-efficient Vitz [Yaris] subcompact, which hit the market in December.

Concerning faltering sales of the Prius, a senior Toyota official said, ''That is in line with our expectations.'' Toyota now aims to make a comeback by broadening the lineup of its hybrid cars.

Competition among carmakers is expected to continue to intensify now that there is a growing choice of eco-friendly cars available in the market.

Nissan has launched its Leaf electric car and Honda is expected to roll out another Fit hybrid around March. Manufacturers are apparently in a race to combine better fuel economy with lower prices.

Among best-selling minivehicles, Daihatsu's Move and Tanto sold some 9,000 units each between 1 and 28 January and Suzuki's WagonR about 8,000 units, according to the sources.

The official sales rankings data are due to be released by the Japan Automobile Dealers Association and the Japan Mini Vehicles Association on Friday.

The rate of decline in overall vehicles sales in January slowed compared with the three months to the end of December when sales plummeted after the end of the eco-friendly car subsidy programme, according to the Japan Automobile Dealers Association.

The launch of new products bolstered sales to some extent but the monthly sales growth was not as strong as that registered a year before when the subsidy programme was in place.

In January, passenger car sales excluding minicars dived 23.8% year on year to 167,574 units.

''The automotive business will not bottom out unless passenger car sales recover,'' an official with the Japan Automobile Dealers Association said.

Sales of Toyota brand vehicles plunged 27.7% while and Nissan and Honda also saw sales tumble more than 20%. Suzuki's sales surged 53.8% due to new model launches.

Minicar sales in January declined 7.8% to 118,342 units, falling for the fourth straight month, the Japan Mini Vehicles Association said also Tuesday.