Honda Motor launched its new Insight in Japan this week with executives making it clear the company wants the new five door hatchback model line to compete strongly on price.

The car will retail at JPY1.89m (US$20,629), cheaper than the rival (and recently redesigned) Toyota Prius.

Speaking at the launch event, Honda president Takeo Fukui said the biggest key to the success of the car is pricing, given the current economic conditions.

”Our price starting from 1.89m yen is beyond common sense for conventional hybrid cars,” Fukui said.

Honda said it aims to sell 5,000 Insights in Japan a month, with plans to launch the model in Europe and North America next spring. The annual global sales target is 200,000 units.

Honda said it wanted to sell the car below $20,000 in the US.

The Insight features a hybrid system including a 1.3-liter i-VTEC engine and Honda’s proprietary Integrated Motor Assist (IMA). To further support fuel-efficient driving, the Insight features the Ecological Drive Assist System (Eco Assist) as standard equipment on all models.

The company said that cost reduction was achieved through enhanced efficiency of the IMA system and the use of parts shared with other Honda cars.

Honda said the Insight achieves fuel economy of 26km/litre in JC08 mode and 30km/litre in 10•15 mode.