The new Prius features a more radical design and is larger than the outgoing model and will go on sale in the UK in November.
Toyota will be targeting fleets with the new car, expected to be priced at about £18,000, or at the same level as an upper-medium car with a 'clean' diesel engine and similar level of standard equipment.
Thierry Dombreval, Toyota senior vice-president of sales and aftersales, said: 'Although we do not yet know how sales will be split, fleets will be a significant element of our overall strategy with the car. Company car tax in the UK is going to be extremely favourable for the Prius. Its carbon dioxide emissions will place it well within the lowest band for company car tax.'
Based on Toyota's 100g/km CO2 emission estimate, the new Prius will fall into the 11% benefit-in-kind tax band thanks to significant discounts for clean vehicles. Dombreval added: 'Hybrids also benefit from the discount on the London congestion charge, a factor that has increased interest in the current Prius and helped improve its residual values.'
Toyota's CO2 emissions target for the new Prius is 100g/km. If successful, it means the Prius would also qualify for the new AAA band for vehicle excise duty, but Dombreval said it might be slightly higher.
'When we are looking at emissions at this low level, it becomes very difficult to achieve even a 1g/km improvement, so we are hoping to achieve between 100g/km and 103g/km,' he said.
Next year will see the launch of a Lexus RX hybrid with carbon dioxide emissions and performance targets of 150g/km and 0-62mph in 7.5 seconds, threatening to send shockwaves through the premium sport utility vehicle sector.
Meanwhile, Dombreval said that a third hybrid model would be developed for the lower- medium sector so that by 2010 Toyota will sell 50,000 hybrid models a year in Europe while hybrids built by all manufacturers would make up 14% of all new car sales.
The new Prius promises more driver appeal with a sub 11-second 0-62mph time and vastly improved driving dynamics. Unlike Honda's hybrid models, the Toyota Prius is a full hybrid, offering zero emissions capability. The Honda Civic IMA, which goes on sale this week, uses an electric motor to assist the petrol engine but cannot run in fully electric mode. Toyota claims that full hybrids will take the lion's share of sales in the future.