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Toyota Motor Company announced today that it would suspend production of its full sized trucks and open a new assembly plant for its Prius hybrid in the US. Sales at Toyota have slipped 6 percent this year, as rising gas prices have lowered demand for SUVs and trucks. To clear inventory, Toyota said it would suspend production of its Sequoia SUV and Tundra pickup truck for three months beginning in early August.

While sales for trucks and SUVs have plummeted, the demand for economy cars and hybrids has skyrocketed, forcing the company to contend shortages at its dealerships. US sales of the hybrid fell 26 percent in June as dealers ran out of supplies for the popular cars. New owners now face a six month wait for vehicles which are currently built in Japan.

Toyota's Tupelo plant, which was initially designed to produce SUVs, will start making the Prius sometime next year. The plant will become the company's eighth assembly plant in North America and will have the capacity to produce 150,000 vehicles a year. The change over to a new hybrid auto plant sets the stage for competition with the largest US automaker, General Motors. GM is scheduled to begin production of its all-electric Chevrolet Volt in Detroit in late 2010. GM hopes that the electric vehicle will eventually become more popular with consumers than the gas hybrid.