An intensifying race for the coveted title of "greenest" carmaker has pitched Toyota and Honda into a worldwide price war on hybrid cars that could see models in Japan selling for under £14,000.
Sales staff at one car dealership in Tokyo told The Times that the looming confrontation would almost certainly force the world's biggest carmaker to make "quick and deep" cuts to the price of its flagship Prius model or risk Honda's Insight stealing the momentum as the world's most recognisable hybrid electric car brand.
The basic Prius model currently sells for Y2.3 million (£16,430) in Japan: company sources now say that the price may be slashed to just Y1.9 million in an effort to remain exactly competitive with Honda. That order of price cut, despite the damage it will do to Toyota's bottom line, is expected to be replicated around the world according to the price of the Insight in each individual market.
Meanwhile, Toyota is preparing for the May launch of its new model Prius, and may now be nudged into bringing it into the market at close to the Y2 million range in order to maintain its edge over Honda. The Nagoya-based company is understood to be working on plans for an even cheaper hybrid saloon to be released in 2011.
The impending showdown in the showrooms comes amid the most abject sales slump in Honda and Toyota's corporate history and the violent erosion of margins at what used to be among the most profitable companies in Japan. Markets that were expected to take up the slack from tumbling sales in Japan, the United States and Europe
Toyota is expected to close its financial year at the end of this month with the first annual loss in more than 50 years. Honda may remain in the black, but the downturn has forced it to shed some of its most treasured divisions, including the Formula One racing team.
The gauntlet in the hybrid war was thrown down earlier this year and now sits proudly in front of Honda's head office in central Tokyo: a four-door hybrid electric car priced below the critical Y2 million mark - a pricing point long viewed by industry analysts as the level at which anyone, regardless of their views on fuel efficiency or the environment, would consider buying one.
The announcement of the Insight's price dealt a heavy blow to Toyota, whose 2003 Prius model had enjoyed strong sales growth around the world and suffered little in the way of competition from rivals: the Detroit carmakers' combined lack of a competitive hybrid model has allowed the Japanese giant to craft its "green" image with little in the way of competition.
Both Toyota and Honda are, however, girding themselves for the arrival of Ford's new hybrid sedan, the Fusion - a vehicle that is tipped to provide stiff competition with the Japanese carmakers, particularly in a thickening atmosphere of "Buy American" consumer nationalism.
Toyota recently announced that it had sold its one millionth Prius in the US market - a giant lead that will stretch Honda's marketing powers to their limits.
According to a recent report, Michael Dick, a member of Audi's board of management for technical development has stated that the company is considering building a new RS3.
Power would come from Audi's 2.5-liter five-cylinder turbocharged engine, with 340 horsepower and 450 Nm of torque, which has launched on the recently unveiled TT-RS. Considering that the proposed RS3 would probably weight about as much as the TT-RS, a 0-62 mph time of around 4.6 seconds sounds reasonable as does the suggested 179 mph (288 km/h) top speed.
With the next generation A3 not scheduled to be unveiled until 2011, the possible launch of the RS3 is still several years away should the model be given the green light in the first place.
Further spy images of the forthcoming Ferrari F450 have emerged. The test mule was shot while testing in Sweden in conditions which are not ideal for a rear-wheel-driven Ferrari. Nevertheless, ice-cold circumstances are part of the development process if reliability under any kind of weather is to be claimed.
Boasting over 500hp the F450 is even rumoured to have a higher power output than the 520hp F430 Scuderia. Ferrari will use the same double-clutch gearbox from the California for the F450 to double-up with the envisaged 4.5-litre V8. How the global financial difficulty has affected the scarlet marque will be seen in the F450 through possible technologies like a road car version of KERS (Kinetic Energy Recovery Systems).
The mule in these pictures may be disguised as an F430 but the differences are easy to spot; wider fenders, the air scoops and that centrally-mounted exhaust pipe give the guessing game away.
Ferrari has apparently codenamed the car F142 and it is expected to make its first public showing at the Frankfurt Motor Show in September 2009. Deliveries would then commence just over a year from now.
Hyundai's EQUUS has arrived in Korean showrooms with a few more details on the premium-rivaling full-sized sedan.
The EQUUS comes with a choice of two gasoline/petrol engines, the 3.8 liter V6 Lambda or the 4.6 liter V8 Tau. The Lambda pumps out 285 hp and 358 Nm of torque. The Tau is good for 360 hp and 439 Nm of cranking power. Solid numbers but not in any way euro-competitive against the triumvirate of the German premium brands, BMW, Mercedes-Benz and Audi. The EQUUS is slated to be released in China and markets in the Middle East later this year with no news yet on whether the model will be making its way to Europe.
But that's not to say there's nothing competitive in this car. The 5-link suspension coupled with the Amplitude Selective Dampers (ASD) with a state-of-the-art relief valve, likely give the EQUUS a balanced ride with just the right amount of give and take.
There are also some techno-goodies like the electric parking brake, lane-departure warning system, smart cruise control and a 3.5-inch display screen for the driver information system that will make the EQUUS live up to its value for money proposition.
Speaking of which, the EQUUS is available in 4 trim levels and prices begin at 63.7 million won (33,514 euros) for the VS380 and max out at 105 million won (55,857 euros) for the VS460 Prestige.
An extended wheelbase version of the EQUUS with a 5.0 liter engine is due later in the year.