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Toyota Canada Inc. TM-N has drawn first blood against Honda Canada Inc. HMC-N in the battle of the new 2010 hybrid cars.

Toyota's redesigned Prius outsold Honda's new Insight by 350 to 85 in June, the first month the new Prius was on sale.

It's one of the more intriguing battles in the Canadian automotive market as Toyota tries to maintain hybrid leadership in the face of Honda's Insight, which represents the most direct challenge to Prius since the Toyota car went on sale in 2000.

Honda has revamped its strategy in the fuel-sipping, environmentally friendliest auto segment by using Insight to offer a dedicated hybrid model in addition to hybrid versions of some of its cars. That has been Toyota's strategy from the outset.

The 2010 Insight, which went on sale in April, has so far not met Honda's sales expectations, Jerry Chenkin, the company's executive vice-president said in an interview.

The main reason for that, Mr. Chenkin said, is the price of gas, which is below $1 a litre in most of the country, a far cry from where it was almost exactly a year ago when prices hit an average of $1.40 a litre nationally.

“The consumer is purchasing a vehicle or deciding what vehicle they would like to buy based on the price of gas,” he said. “If the price goes up, they flock to hybrids and if the price goes down, they flock the other way.”

So Honda is trying to generate some buzz around the Insight by setting up test drives by groups of automotive product journalists.

The company wants to communicate “the real story about how great this vehicle is for the environment, how much fun it is to drive, how well balanced it is,” he said.

Toyota, on the other hand, believes the price of gas has little impact on Prius buyers and has the advantage of high consumer awareness of the car, in part because it now is in its third generation.

“I think people buy Prius because they're attracted to the idea of Prius,” said Stephen Beatty, the company's managing director. “That goes beyond fuel economy or emissions.”

Buyers of the larger, mid-sized Camry hybrid on the other hand are probably making a decision to buy that car when they arrive in the showroom and decide the mix of features and fuel economy makes more sense than the internal combustion engine version of the car, Mr. Beatty said.

That helped make the Camry hybrid the best-selling hybrid last year in Toyota's lineup in Canada, the only country where Prius was not the best-selling hybrid for the company

“My objective is to see that [the Prius] becomes the top-selling hybrid in our lineup,” he said.

The early lead for Toyota in the hybrid sweepstakes likely comes from higher consumer awareness of the car, said Chris Travell, vice-president of automotive for Maritz Canada Inc.

“If you were to ask 100 Canadians who knows of Prius and who knows of Insight, clearly the lion's share would fall into the Prius camp,” Mr. Travell said. “It just takes time to establish that awareness.”

He agreed with Honda's Mr. Chenkin that gas prices are also one factor hurting Insight sales.

“Any time you've got gas under $1 it's a little difficult for a consumer to swallow that price difference that they have to put out in order to get that hybrid technology,” Mr. Travell said.