Toyota Kirloskar - a joint venture between Toyota Motor and Kirloskar Motors India - has put the launch of the Prius hybrid on hold because it cannot price the car competitively against its Honda rival.

The company had initially planned to launch the Prius at about INR2m (GBP27,000; US$40,000) but the recent (temporary) price cut for Honda's Civic Hybrid sedan of INR800,000 to INR1.3m (GBP17,500; $26,000) has made it difficult to fix a price tag according to a Toyota Kirloskar official.

Though some Toyota models such as the Corolla and Innova are built in India, the complex Prius is a full import (it is built only in Japan and China so far) and is slapped with a 114% import duty rate.

Rival Honda Siel launched the Civic - the first hybrid to be sold in India - last June at INR2.15m but sold only 60 units to the end of October.

Announcing the 60% price cut last month, marketing chief Jananeswar Sen said many customers had wanted to buy the car but were unable to do so because of the high import duty.

"As our priority is to popularise the technology, we have decided to cut the price for a limited period," he said.

Part of the discount would be borne by the company and a limited number of units would be imported during the offer period.

Toyota Kirloskar, meanwhile, is focusing on launching the Fortuner SUV and a new compact car by mid-2009. It is also spending US$160m on a new plant in Bangalore.

Kevin Jacobs