TOYOTA has sliced $2000 from the price of entry to its Camry Hybrid range with the introduction of an all-new second generation that it hopes will finally spark mainstream consumer interest in petrol-electric cars – a breed that attracted less than one per cent of Australian vehicle buyers last year.

Still the only hybrid model in the medium-car class in Australia, the locally made Camry Hybrid has consistently fallen way short of the 10,000 annual sales target set by Toyota two years ago. Last year Toyota sold 5204 – half the launch target.

This time around, the base-model ‘H’ will start at a more attractive $34,990 (plus on-road costs) – a 5.4 per cent reduction on the previous model’s $36,990 list price – while gaining eight per cent more power, a 13 per cent fuel economy improvement, extra equipment and all the general improvements of the latest Camry range that hit the market in December.

This price represents a $4500 premium on the $30,490 entry-level Camry Altise, and $1500 on the second-tier $33,490 Atara S, to which the Hybrid H is more closely aligned.

The Camry Hybrid is now cheaper and more fuel-efficient than the cars it is most likely to be shopped against – the $35,490 Ford Mondeo LX diesel hatch and $35,950 Mazda6 Sports diesel wagon.

It regains the segment fuel-miser crown, sipping just 5.2 litres per 100km on the combined test cycle – down 0.8L/100km on the previous generation’s 6.0L/100km to eclipse the 5.9L/100km achieved by the diesel Mondeo and Mazda6.

It now uses one-third less fuel than the standard Camry (7.8L/100km).

Carbon dioxide emissions are also class-leading at 121 grams per kilometre (previously 142g/km), compared with the Mazda6 diesel’s 154g/km and Mondeo’s 157g/km.

Toyota claims the saving at the petrol pump over the standard Camry is $2340 over three years for a driver covering 20,000km a year.

While the entry-level Camry Hybrid H is cheaper, the upper-level HL – standing for Hybrid Luxury – cops a $1500 increase, rising to $41,490.

Toyota Australia says this price hike is more than offset by $4500 in extra equipment, including the blind-spot warning system and automatic high-beam headlight switching introduced on the latest upper-crust Camry Atara SL petrol model.

As before, the Camry Hybrid is made alongside the petrol Camry and soon-to-be-upgraded V6 Aurion at Toyota Australia’s Altona plant in Victoria.

From the end of this year, the specially modified engine for the Camry Hybrid will be made locally for the first time on a revamped $300 million engine production line, but in the meantime all the Camry engines are being imported from Japan.

Up from 2.4 litres in the previous Camry Hybrid, the new 2.5-litre petrol engine delivers 7.2 per cent more power (118kW, at a lower 5700rpm), along with 14 per cent more torque (213Nm), with a 20 per cent lift in torque at lower engine speeds.

The electric motor adds 105kW and 270Nm, for total punch of 151kW – sufficient to slash the 0-100km/h sprint time from the previous 8.9 seconds to 8.0 seconds – making it 1.3 seconds faster than the standard 135kW/235Nm petrol Camry.

As well, the Camry can be driven up to 2km on electricity alone, as long as the nickel-metal hydride battery has sufficient power and the driver does not exceed 45km.

This time, the all-electric mode can be selected by the press of a button, whereas the previous model left the decision to the car’s computers.

The hybrid motor generator control software has a ‘Made in Australia’ stamp, as it was written for the global model by Toyota Australia engineers at Toyota Technical Centre Australia in Melbourne.

Other elements of the base Camry such as wiring harnesses and the doors were developed by local engineers in league with their Japanese colleagues, while the suspension was also locally tuned.

The Camry Hybrid picks up all of these improvements in the new model, along with a few of its own, including more insulation for a quieter ride.

Boot space – while well short of the standard Camry’s 515 litres – has been improved by eight per cent over the previous hybrid, to 421 litres, thanks to repackaging of the battery and DC-converter.

The Camry Hybrid can even tow something now, although only up to a puny 300kg, ruling out a caravan or any boat above a tinnie.

Power is delivered via the front wheels, which once again are driven through a continuously variable transmission (CVT) instead of the six-speed automatic transmission of the new petrol Camry.

As before, the Camry Hybrid gets its own styling treatment, with a chrome-topped grille and blue-accented headlights, as well as the usual blue hybrid badges front and rear.

Inside, brushed metal inserts set the hybrid models apart from the standard fare.

Like the standard Camry, the hybrid variants now get seven airbags, including a driver’s kneebag, plus power-operated driver’s seat.

Sixteen-inch alloy wheels are standard on the Camry H, along with dual-zone auto climate-control, smart-key entry and start, hill-start assist, reversing camera, six-speaker audio with a 6.1-inch screen and metallic paint.

The Camry HL gains a boot-lip spoiler, 17-inch alloy wheels, foglamps, chrome door handles, leather trim, driver’s seat memory, power front passenger seat, premium steering wheel and gearshift knob, electro-chromatic mirror, rear parking sonar, back-guide monitor for the reversing camera and an electric rear sunshade.

As well, the premium 10-speaker audio system moves up to a seven-inch screen with sat-nav, live traffic updates and digital radio.

Toyota Australia executive director sales and marketing Matthew Callachor said the Camry Hybrid was in a class of its own.

“We expect all these benefits – in addition to the noticeable enhancements to styling dynamics and value – to increase sales of the Camry Hybrid in Australia,” he said.

Last year, hybrid vehicle sales in Australia totalled just 8820, representing 0.87 per cent of the new-car market.

In the official VFACTS figures, Toyota has not broken out Camry Hybrid sales figures since April 2010, when its sales slipped to 396 for the month.

Toyota’s Prius hybrid achieved 822 sales in 2011 and the Lexus CT200h found 1311 new owners while, over at Honda, the Insight managed 715 sales and its recently arrived petrol-electric sibling, the CR-Z, shifted 75 units towards the end of the year.

While the Camry Hybrid has been in a class of its own since its local launch in February 2010, it might not have that advantage in future, with Nissan potentially launching a hybrid version of its Altima in Australia in a year or two.