WASHINGTON, July 10, 2008 (AFP) - Japanese auto giant Toyota said Thursday that it plans to start assembling its fuel-sipping Prius hybrid car in the United States with production slated to begin in late 2010.

Toyota announced its plans to start production of the Prius hybrid as rival US auto firms like General Motors and Ford reel from a sharp sales decline for gas-guzzling trucks and sport utility vehicles (SUVs).

'Prius, which will join the Kentucky-built Camry Hybrid as the second Toyota hybrid built in North America, enables Toyota to better respond to increased consumer demand for hybrid vehicles,' Toyota said.

Demand for hybrids and more fuel-efficient vehicles has increased in the past year as world oil prices have spiked dramatically. The surge in oil prices has pushed up US gasoline prices, making Americans more wary of the cost of the fuel they pump into their vehicles.

Toyota said it planned to start producing the Prius at an assembly plant presently under construction in Blue Springs, Mississippi. The first US-produced Prius cars are due to roll off the assembly lines in two years time.

Toyota is building its new plant as rival US automakers close plants and cut back assembly operations.

The Japanese automaker established its first operations in North America in 1957 and currently runs 13 manufacturing plants.