Toyota plans to continue selling the current Prius alongside the new model at a reduced price in Japan to help counter Honda’s successful new Insight, which has now attracted 21,000 orders.

Media reports have said Toyota would sell the next generation Prius at JPY2.05m (US$20,940), or roughly US$3,000 less than its smaller, less powerful and less fuel-efficient predecessor but company president Katsuaki Watanabe declined to confirm that at the Crown Majesta launch in Japan.

He told Reuters the new car came close to achieving a target of reducing the hybrid system’s cost to a quarter of the first version, which went on sale in 1997, while costs were also cut on other components and modules in the car.

“The price will take into account the cost cuts, and the competitive environment at the time of launch,” he said. “That Honda has come out with a wonderful car like the Insight gives us a big impetus to try to be more competitive.”

Saying the old Prius model would be sold alongside the new version, in Japan at least, Watanabe added: “They will have different engine sizes – 1.5 litres and 1.8 litres – and we figure there will be demand for the two to co-exist.”

Some local reports have said Toyota would take the unusual step of lowering the price of the current version to JPY1.89m – the same price as the Insight and sharply lower than its current price of some JPY2.33m.

Watanabe also said US auto industry sales are showing no signs of recovery from a weak start to the year.

“Annualised sales in January and February were a little above 9m, and we’re hearing that March will be about the same if not worse than February,” he said.

Watanabe said he could not tell when global car sales would bottom and said he hoped governments around the world would offer incentives to jump-start demand.

Toyota has said its global production would hit a trough in the January-March quarter, during which it has idled factories for days and weeks at a time while selling cars from its bloated inventory.

Watanabe also said Toyota was not planning to have any factory holidays in Japan from May and beyond, when the company hopes to keep daily output above 10,000 units.