Toyota to build Prius in the US

Toyota, caught by surprise by the runaway popularity of its hybrid petrol-electric, will begin building them in the US after stocks have sold out.

In a stark sign Americans really are abandoning their gas-guzzlers, it is to begin making the low-emissions car on a Mississippi site formerly earmarked for the Highlander sport utility vehicle.

Sales of the Prius in North America fell 26% last month because dealers sold out as petrol prices rose. Toyota hopes to plug the gap with the new production line. The move by Americans away from their fuel-guzzling giant cars has hammered sales of GM, Ford and DaimlerChrysler, and put Toyota within sight of becoming the biggest-selling US brand.

The Japanese firm has not been immune from the US downturn, and has made some wrong bets - notably with the Tundra pick-up truck. That led to a 6% drop in first-half sales in the US.