Toyota's gas-electric hybrid, Prius, and the first hybrid vehicle, surpassed the company's expectations to achieve a record booking of 180,000 vehicles within a month of  its launch on 18 May in the Japanese market.

The record sales exceeded the company's target of 10,000 units per month. The sale includes the 80,000 units booked during the prelaunch of the new Prius 2010.

Toyota's  Prius overtook its rival, Honda's Insight, in May to make it to the top position as the No1 selling vehicle, (See: Toyota Prius May domestic sales overtakes Honda's Insight as No 1 car in Japan)

Hybrid vehicles have been taking the top spot in auto sales mainly on the government incentives given to the auto industry in the wake of the plummeting car sales on account of the global financial crisis, a strengthening yen and the US credit crunch.

Last month, 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.

Thanks to the incentive, hybrids are now tax-free in Japan and a Prius buyer saves about $1,500 which has added to the demand for the vehicle.

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-engines.

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.

Suddenly, the hybrid car race has been thrown wide open, especially since Honda, in a smart marketing strategy in times of recession, introduced the Insight at 1.89 million yen ($19,700) compared to the new Prius's 2.05 million yen ($20,900), cheaper by 280,000 yen ($3,000) for the previous version. Toyoto reduced its price mainly to reduce the price difference with rival Honda's Insight. (See: Toyota may slash Prius prices to meet Insight challenge)

With the demand for Prius surging customers today have to wait atleast for a period of seven months before they can get delivery of the vehicle, according to Toyota spokesman.

In May, Toyota decided to increase the production of its new Prius, by around 20 per cent from around 42,000 to about 50,000 units per month, requiring  enhanced production timings for which the Japanese car maker introduced overtime at its two factories at Kariya and Toyota where the Prius is manufactured.(See: Toyota raises production targets for Prius 2010)

Toyota also raised its full year production target for the new hybrid from 300,000 to 450,000-500,000 units in Japan for 2009 while its US target is 180,000 units  for the full year.