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Toyota is readying a new, cheaper Prius

Toyota Motor Corp. said it won't change the price tag on its next-generation Prius when the hybrid hits U.S. showrooms in late May.
/ Source: The Associated Press

Toyota Motor Corp. said it won’t change the price tag on its next-generation Prius when the hybrid hits U.S. showrooms in late May and will release an even cheaper version later this year, as the automaker aims to compete with the latest hybrid from rival Honda Motor Co.

Toyota said Tuesday the 2010 Prius will start at $22,000 — unchanged from the base price for the 2009 model. Toyota will release a more basic model later this year starting at $21,000, the Japanese automaker said, but did not elaborate on what features it will or won’t come equipped with.

Toyota, the world’s biggest automaker by sales, has long been the leader in the hybrid market, and the Prius remains the most popular hybrid in the U.S. But Prius sales fell 57 percent in March. Although Toyota attributed much of the decline to the sell-down process ahead of the rollout of its latest model, hybrid sales overall have fallen sharply as gas prices plunged and as the economic downturn makes it more difficult for consumers to pony up the premium that many hybrids carry.

The new Prius, the third-generation of the gas-electric vehicle first unveiled in the U.S. in 2001, will get a combined 50 mpg, compared with 46 mpg for the 2009 model, Toyota said. The new Prius will have 134 horsepower, an increase of 24 horsepower over the previous generation.

Higher-end models coming with extra features will range up to $27,270, the automaker said.

Toyota’s much-hyped hybrid is expected to compete head-on with the Honda Insight hybrid. The Insight in the U.S. carries a lower manufacturer’s suggested retail price of $19,800 for the base model as it takes aim at economy-minded buyers. It gets a combined 42 mpg.

Toyota was set to build the 2010 Prius at a plant under construction at Blue Springs, Miss., but the automaker put those plans on hold last year due to the industry downturn.

U.S.-traded shares of Toyota rose 68 cents to close at $76.47.