Toyota Motor Corporation, the world's third largest carmaker, will next week unveil a production version of its second-generation gasoline-electric hybrid car 'Prius'.

It promises better fuel economy and improved levels of comfort inside, and at no extra cost, representing a significant step forward. Hiroyuki Watanabe, the company's senior managing executive in charge of the hybrid business, said 'others are going to have to step up plans to develop hybrids too.'

Toyota has been producing hybrids for seven years, while other manufacturers have refused to, citing the inevitability of emissions-free fuel cell vehicles.

Now the top two producers, General Motors and Ford, are preparing to roll out hybrids to fleet customers later this year, with the eventual goal of offering them to retail customers in 2004.

Industry analyst JD Power recently predicted that in a decade's time one in 20 cars sold in the United States would be a hybrid. The rate last year was one in 42.

However, while interest in hybrids is strong in the US, in Europe diesel remains a more attractive proposition.

According to Morgan Stanley analyst Nicolas Hirth there is some scope for other new technologies but diesel remains the way forward.

'The Europeans are working on a range of technologies but they still prefer working with diesels, first and foremost,' he explained.

Indeed, international diversity in the field of low-emission automotives is coming to characterise the industry - in Brazil a cane-based ethanol solution is being proposed while in Iceland fuel-cell vehicles are in demand.