Toyota effectively declared war last week when it announced that its gasoline-electric 2010 Prius hybrid will sell for just $1,280 more than the Honda Insight hybrid.

Prius is bigger, faster and more fuel-efficient, and has a broader array of options. The 2010 Insight, which gets up to 43 miles per gallon, went on sale March 24. The 2010 Prius, rated at up to 51 mpg, goes on sale in late May.

Toyota's aggressive move underscores how vicious the auto market has become as car companies try to hold their own in a recession-wounded market. First-quarter U.S. sales for all brands were down 38.4 percent from a year earlier, according to industry-tracker Autodata. For all of 2008, sales were off 18 percent.

Toyota sales in the first quarter, including the luxury Lexus brand, were down 37.1 percent. Honda sales, including Acura, were off 34.5 percent.

Honda spokesman Sage Marie noted that Toyota gave no details about the cheapest Prius, which will start at $21,750, but elaborated on more-expensive versions. Marie says that suggests to him that it might be a showroom rarity and that a pricier $22,750 midlevel Prius might be the real-world base model.

But Toyota spokeswoman Ming-Jou Chen says that while the better-equipped, midlevel version will make up about two-thirds of Prius sales, the Prius I base model "will be out there." The list of standard equipment on the least-expensive Prius will be released later, Toyota says.

Ming says the base model will lack some features standard on other Prius models: cruise control, a rear wiper and an EV-only mode that keeps the car operating on battery-only as long as possible.

And it won't have the "touch-tracer display" that shows onscreen what the driver has adjusted using steering-wheel controls, minimizing the need to glance down.

"There's enough room in the hybrid market for both," Marie says.

Toyota also is considering a hybrid version of its small Yaris as a way to undercut Insight pricing.

"Insight's still an excellent value. It appeals to customers who didn't consider a hybrid before," Marie said.

In keeping with Toyota's intent to make Prius a technology showpiece, the company listed $6,300 in options a buyer can choose on top of the $28,020 starting price for the deluxe version of the car. That could bump the total sticker price to $34,320.

Honda says the most you can spend on an Insight is $24,770.