Major automakers in Japan are competing fiercely to get their share of the hybrid car market pie.  Competition between the leaders in hybrid cars – Toyota and its rival Honda – is now set to intensify as both the companies are preparing to launch their new hybrid car models next year.   This is going to lead to a price war which would help the help to increase popularity of hybrid cars in Japan.  As per the latest news from Nikkei Business Daily, Honda’s new two-seat hybrid car CR-Z will cost just around US$16,750 (1.5 million yen), which would make it the cheapest hybrid car in Japan.  CR-Z will be available in the market from autumn this year.

CR-Z — which stands for Compact Renaissance Zero — is a two-seater gasoline-electric hybrid car, which is lively and comfortable and comes with CVT (continuously variable tranmission) as well as manual transmission.  In spite of its low price tag, the Honda CR-Z doesn’t look or feel like a cheap, thrifty car.  The new hybrid from Honda has fuel efficiency of 30 km per liter (34 miles per gallon) of gasoline, compared with the Fit’s 24 km per liter.

The design of Honda’s new hybrid car CR-Z will be based on its gasoline powered compact car Fit, and will share core components of its hybrid model Insight – in order to reduce the development costs.  As a result, the new hybrid car will cost about US$4,400 (400,000 yen) less than Insight hybrid, and about US$2,200 ( 200,000 yen) more than Honda Fit.  With this move the  Honda CR-Z  will cost 20% less than the cheapest hybrid car in the Japanese auto market today.

This price war will put both the car makers – Toyota and Honda – at a disadvantage when profit margins are concerned.  However, when hybrid cars would be available in the normal price range of gasoline powered cars and can offer a performance better than the conventional cars powered by gasoline, hybrids are going to be popular even if the government offers no tax incentives.

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Toyota Motors whose popular hybrid car Prius posted top-most sales in Japan for the 6th consecutive month.  Apart from being an fuel efficient car, something which helped the domestic sales of Prius is the Japanese government policy to offer subsidies and tax breaks for purchasing eco friendly vehicles.

In this gloomy situation of Auto Industry, Toyota Prius is turning out to be a rare bright spot.  With Toyota Prius you can drive about 38 Km per liter.  In heavy traffic situation, hybrid cars like Toyota Prius rely completely on their electric motors and thus burn no gas.  As of now Toyota’s Prius, which works on both electricity and gasoline, continues to dominate Japanese auto sector.

According to the Japan Automobile Dealers Association (JADA), Japan’s biggest automaker – Toyota sold over 26,900 Prius hybrid cars this October, which is quiet a big leap considering its October sales last year which was just around 6,341 units.

After facing losses for three consecutive quarters, the biggest auto maker from Japan – Toyota – has finally hit the bull’s eye in the month of July and September by gaining profit of around 22 billion yen (US $240 million).  Toyota Motor Corp has also reduced its expected loss by 50% for this financial year. Increasing domestic demand of Prius has helped Toyota to post a surprise profit this quarter.

Meanwhile for the fourth consecutive month,  Honda’s Fit – a people carrier, occupied the second position, selling around 15,440 units in Japan. Compared to last year’s October sales Honda Fit has gained about 26.7 percent more sales. To boost its sales, Honda wants to come up with the hybrid version of the Fit next year. Even though the Fit is not a hybrid vehicle, it still eligible for all subsidies and tax breaks given by government as it is fuel-efficient vehicle.

This October third position was occupied by Vitz subcompact from Toyota whereas, the direct competitor of Toyota’s Prius – Honda Insight occupied ninth position.

Considering the environmental concern, and the initiative taken by the Japanese government, Japanese auto market is experiencing increase in the demand for environmentally friendly and fuel efficient cars.  These eco-friendly cars are going to dominate for few more years.

Technorati Tags: Japan, Toyota Prius, hybrid cars, Automobile, Honda Fit