The Honda Insight got off to a quick start in Japan where it launched in March prior to the third generation Prius. However, the new Prius with its improved design, extreme efficiency, and robust ride and handling is quickly taking the wind out of the Insight's sail (or should I says sales). The fact that the Prius starts at a mere $2000 more than the Insight is further weakening Honda's intended edge in being a low cost hybrid.
Apparently Honda is taking notice of these disparities, as the Insight rides a bit sluggish, is loud, and has no ability to drive solely on electricity. Its average fuel efficiency is 41 MPG, falling far short of the Prius' 50 MPG average.
Normally cars are on a roughly 3 -year engineering upgrade cycle, but becasue of their weak position Honda engineers are said to be planning a rapid mid-cylce upgrade so as not to lose too much momentum to the Prius.
The focus of the upgrade will primarily be to further improve fuel economy, but chassis refinement to improve ride and handling is also being looked at.