Toyota Yaris

Toyota Yaris.

Earlier this month, Japan’s Nikkei business daily reported that Toyota is planning to introduce a new hybrid model that is significantly less expensive than its existing gas-electric cars. At that point, Toyota refused to comment on the report, but Toyota officials have now confirmed their intention to make a small affordable hybrid.

“We are developing a low-priced hybrid vehicle like Honda’s Insight,” said Akihiko Otsuka, chief engineer of the redesigned, third-generation Toyota Prius. “We are going to compete by expanding our hybrid-vehicle lineup to smaller hybrids, in the class of the Vitz [sold in Japan] and Yaris.” He did not say when the small hybrid would debut, but it could arrive as early as 2011, according to Nikkei.

When the new 2010 Honda Insight goes on sale next month, it will become the first hybrid car available for less than $20,000. A Yaris-based hybrid could directly compete with the Insight on price. The most expensive gas-version of the Yaris carries a suggested retail price of $15,880.

The introduction of the Honda Insight, and the confirmation of a small affordable Toyota hybrid, is a sign that fuel-sipping hybrid technology is becoming more accessible to mainstream car buyers.