By 2006, Toyota and Honda hybrid models alone could account for 10 percent of the more than 2 million mid-size passenger vehicle sales in the U.S., proving that hybrids are no longer a niche market, ABI Research, headquartered in Oyster Bay, NY, said in a report published on on March 15.

Reports indicate Toyota will introduce a hybrid version of its Camry model to the U.S. in 2006, with a sales target of 100,000 vehicles. This follows an announcement from Honda that a hybrid version of its Accord model will go on sale in the U.S. for 2005.

"This changes the game," the report quotes ABI analyst Dan Benjamin. "Honda and Toyota are the market leaders, as the Accord and the Camry are the dominant vehicles in the mid-sized segment. Other automakers will try to keep pace with their own hybrids, but those without proper development will either be forced to license hybrid technology or try and market diesels as a competing technology."

Diesels will be used by manufacturers such as DaimlerChrysler and Volkswagen in lieu of hybrids. However, existing diesel offerings in the U.S. market cannot match current hybrids in terms of performance, economy, or cleanliness, and will have to be improved upon to remain competitive, said ABI Research. Diesels must also be equipped with expensive exhaust treatment systems to comply with upcoming U.S. Tier 2 emissions standards.

Originally posted on Fleet Financials