NAGOYA, Mar. 13, 2009 (Kyodo News International) -- Toyota Motor Corp. (NYSE:TM) plans to price the base model of the new Prius gas-electric hybrid, due to debut in Japan in mid-May, at 2.05 million yen, nearly 300,000 yen lower than the price for the comparable current model, company sources said Friday.

Japan's top automaker also plans to launch a small all-new hybrid with a price tag of less than 2 million yen in around 2011 in Japan, the sources added.

In a bid to retain its leadership in the global hybrid market, Toyota has decided to make the popular Prius more affordable in light of the brisk sales of the 1.89 million yen Honda hybrid Insight, according to the sources. The low-price Honda car hit the market in February.

The new Prius will have a 1.8-liter engine instead of the 1.5-liter engine for the current model. Since its fuel economy will improve nearly 9 percent despite a bigger engine, industry watchers had expected that the base price for the new model will rise to around 2.5 million yen while the lowest-end Prius now costs 2.33 million yen.

The Prius is also struggling in the market amid the global economic downturn so Toyota thought that selling a higher-priced model would turn away consumers.

The all-new hybrid is expected to have an engine displacement of less than 1.5 liter and will share many components with the Prius to cut down on costs, the sources said.