The launch of the Auris Hybrid here in Europe signals something of a sea change at Toyota. Until now, hybrid has largely been the company’s fuel-efficient alternative to diesel but the Auris already offers oil burners – 1.4 (the sole UK choice) and, for other markets across the continent, two two-litre units.

At the launch in Spain this week, Toyota stressed the importance of the C segment in which the Auris competes with the likes of the VW Golf, Opel/Vauxhall Astra and Ford Focus. It accounts for 16% of sales Europe-wide (more like 20% here in the UK). It has, in Toyota executives’ words, the “highest visibility on the street, is the top revenue generator and the favourite family car”.

Toyota’s Hybrid Synergy Drive (HSD) is a proven technology with 2.5m units already on global roads so it’s time to blend “the most advanced powertrain technology with the most popular segment”.

Toyota is pitching the hybrid at the top of the Auris range with a lot of standard equipment so the UK entry price is GBP18,950 but it’s hard to sniff at a claimed 3.8-litres/100km fuel economy and, in the UK, annual road tax and London congestion charge-dodging 89g of CO2 emissions.

In addition, and unlike the Prius, it looks like claimed economy is attainable in real-world conditions as just-auto managed 3.9 after a 200km mix of Barcelona motorway, hills and urban driving. Not bad.

So who will buy?

“There’s always a C-segment buyer seeking differentation,” Toyota product planning and marketing director Duncan McMath said. Typically these include young couples who definitely don’t like MPVs (minivans) or SUVs. In the past they may have opted for a premium C segment GTi or GTD; HSD is a new alternative.

They are willing to buy in the EUR21-26,000 bracket, paying D segment money to get the car they want.

“They’re hybrid-minded, not advocates,” McMath said. “They want a hybrid but they also want a C segment car.”

He noted that 39% of buyers who consider the current Prius go on to buy a C segment hatchback while other buyers looking at the C segment hatchback want “differentiation” or a hybrid.

Once the sale is made, apart from the obvious fuel economy and CO2-based taxation savings, there are also running cost benefits – Toyota calculates the hybrid costs GBP1,288 a year less to run than the two-litre diesel due to reduced maintenance needs.

The automaker expects to sell 14,000 units across Europe in 2010 and 30,000 in 2011. Sales begin in the UK and Netherlands in July and the new variant will then be gradually rolled out across Europe.

Talking UK specifics, Toyota GB chiefs said recent fuel price rises had made “economy vital” and that customers would also consider a British built car in a difficult economy.

The car would be a ‘halo’ model for the UK, acting as an additional showroom draw for the entire Auris range. This was said with a straight face after the Prius was dubbed the ‘Pious’ here due to some owners’ enthusiastic environment advocacy.

Toyota GB hopes to account for 8,000 units in 2011 with a 50/50 fleet and retail split but sees conquest opportunities with 60% of buyers new to Toyota.