The tough competition from Toyota's Prius combined with the continued economic slump is causing American Honda Motor Executive Vice President John Mendel to redefine his prediction for sales of the Honda Insight in the U.S. Originally forecasting sales to reach 90,000 from its release date in March, the Honda VP now claims he will be satisfied if 50,000 to 60,000 of the units sell, taking the lower price of gas in May, and base price of the Prius having been cut by $1,000 by Toyota into consideration.

Sales of hybrids rise or fall with the price of gas; since last July, the price of gas has dropped 35 percent. The demand for the Insight is much greater in Japan where the price of gas is 78 percent higher than in the U.S. According to CNN, the price of gas in Tokyo is at a nine-month high as a result of increased oil prices and an unrelenting gas tax. The Insight was the top selling car in Japan in April, succeeded by the Prius in May.

The 35 percent drop in hybrid sales in the U.S. through May is expected to recover as the price of gas in the U.S. has increased by 40 percent so far this year; increasing every day for the last 48 days. Signs that the recession is waning also spell good tidings for hybrid sales later this year.