Is there about to be a hybrid price war between Toyota and Honda? Toyota is looking to reduce the price of the current Prius to $19,250 in Japan in order to more closely match the price of the new Honda’s Insight, according to Bloomberg News. The Insight will start at $19,800 including destination charges, and if left unchallenged, it would be the lowest-price hybrid in American when it goes on sale this spring. The starting price for the out-going base 2009 Prius is $22,000.

Undercutting the Insight's price wouldn't be easy for Toyota. The Prius is a larger car and it has a more complex hybrid system that allows the car to be regularly propelled at low speeds on the battery alone. The 2010 Prius has standard stability control; you need to buy the Insight in its higher-priced $21,300 EX trimline to get ESC. Given this, if Toyota's serious at undercutting the Insight's base price, perhaps we'll see a price-leader Prius model to rival the base Insight, though doubtful it would include steel wheels as shown in our photo.

Pricing for the redesigned 2010 Toyota Prius with higher fuel economy and a larger engine has not yet been announced. It will arrive at dealers in late spring.

Hybrid vehicles sold like hot cakes last year amid high gas prices. In response, automakers accelerated new hybrid production to increase sales. It seemed like the right move at the time, but now hybrids are sitting on dealer lots. According to an LA Times article, only 15,144 hybrids were sold nationwide last month. Even the segment-leading Prius has seen sales dip, being down 30 percent from this time last year. And now, the market is about to be expanded with new models, including the Insight, Ford Fusion and Mercury Milan hybrids. Competition should help prices, both retail and transaction, be more attainable than in the past.

It may be a difficult time for many consumers to buy a new car, but for those in the market this year, there will be new, fuel-efficient choices whose appeal may increase should gas prices rise again this summer—especially if priced aggressively.

—Liza Barth