Toyota's gas-electric hybrid Prius overtook its rival, Honda's Insight , to make it to the top position as the No1 selling vehicle in May, in the domestic market for the first time in Japan, as hybrid vehicles are taking the top spot in auto sales.
The third-generation revamped version of Prius, launched in Japan just two weeks ago, sold 10,915 units in May more than Honda's Insight's 8,183 units in the domestic market.
Toyota's sales in May were nearly a five-fold increase from the previous month, according to data released by the Japan Automobile Dealers Association.
In April, Honda's Insight hybrid ranked as the top-selling vehicle in Japan, with sales of 10,481 Insight cars, according to data released by the Japan Automobile Dealers Association.
Sales of hybrid cars which are powered by gasoline and electricity have peaked for the second straight month in Japan in the midst of recession indicating the increasing demand for green cars.
The demand for hybrid cars are in Japan are picking up to some extent because of tax break for environment-friendly cars, announced by the government earlier this year, to encourage their sales.
A week ago, the government approved a cash-back rebate for trading in cars above 13 years for greener cars, giving consumers an added incentive to buy green cars.
The other main advantage with hybrids cars is the savings on petrol, especially for city driving where the constant stop-and-go traffic lowers the fuel efficiency of petrol-engine cars.
The Prius, which will be available in two engines sizes of 1.5-litres and 1.8-litres, promises to deliver a fuel economy of 51 miles per gallon (1 US gallon = 3.78 litres) in city traffic and 48 miles per gallon on the highway. Hybrids cars depend on their electric motors, thus saving on petrol in heavy traffic.
For the first time in six months, demand for the Prius hybrid picked up significantly, enabling the company to raise its production targets of its new Prius, the 2010, by around 20 per cent from around 42,000 to about 50,000 units per month, leading to enhanced production timings at its two factories at Kariya and Toyota. (See: Toyota raises production targets for Prius 2010)
Last month, Toyota also raised its full year production target for the new hybrid from 300,000 to 450,000-500,000 units for 2009.
In the US, Toyota is launching an aggressive campaign for the sale of this model. (See: New Toyota Prius to debut US market by end May).
With auto sales picking up globally, Toyota Motors's may benefit as it plans to increase their production targets, launch its Prius in US and luxury brand, the Lexus in India. (See: Toyota to launch Lexus in India soon) and also plans to raise its production to full capacity of its Indian arm, Toyota Kirloskar Motor (TKM), which may help the company to revise their full year forecast of operating loss of 850 billion yen for the fiscal year through March 2010. (See: Toyota Motor posts annual loss, forecast operating loss of 850 billion yen for FY2010)