Toyota to introduce a lower-priced Prius

Toyota Motor Corp. is introducing a lower-priced model of its popular Prius hybrid for the 2008 model year.

Toyota said today that its new "standard" model Prius would have a base price of $20,950. That's down $1,225 from the lowest-cost 2007 model. Some equipment that came standard on the 2007 base model, such as cruise control, will be optional on the new standard Prius.

Including higher-priced models, the total average manufacturer's suggested retail price for the Prius will increase $150 on the 2008 lineup, which will be in dealerships in August.

"We're just trying to make it available for everybody," said Bill Kwong, a spokesman for Toyota Motor Sales USA in Torrance.

Prius sales in June jumped 83% from a year earlier and are up 96% so far this year. It remains by far the most popular gasoline-electric hybrid in the U.S.

But the car is facing increasing competition as other automakers roll out hybrid vehicles. In addition, the federal tax credit available to Prius buyers has shrunk from $3,150 a year ago to $787.50. The credit will disappear altogether Oct. 1.

Prius buyers also face another form of sticker shock: The Prius, like other hybrids, saw a big drop in its fuel economy ratings as a result of new federal gas mileage tests; the new ratings will be listed on 2008 models.

Under the new test, which was designed to more accurately reflect real-world driving conditions, the Prius' average for combined city-highway driving fell from 55 miles per gallon in 2007 to 46 mpg for 2008 models.

Prius buyers in California -- the car's biggest market -- lost another incentive when the state gave out the last of the special carpool lane stickers designed to encourage sales of fuel-efficient and environmentally friendly vehicles.

The new standard model Prius is not considered a redesign. The current design was introduced in the 2004 model year, and a redesigned version isn't expected in showrooms until the 2009 model year at the earliest.