Honda Motor Co plans to sell a hybrid version of its popular Fit compact car at around 1.59 million yen ($18,600), making it the cheapest hybrid in Japan when it goes on sale in October, the Tokyo Shimbun daily said on Sunday.

Thanks to Japanese subsidies on green-car purchases, hybrid cars have become popular in the market for new passenger cars in the past months.

But the subsidies are scheduled to end next month, a move that could trigger a price war with rival hybrid car maker Toyota Motor Corp.

Honda's Hybrid Fit will cost about 300,000 yen less than Insight, Japan's No.2 auto maker's other hybrid offering and currently the cheapest. It will be priced at about 400,000 yen more than Fit's gasoline-powered version, the daily said.

Mainichi Shimbun also said Honda would sell the hybrid Fit at around 1.6 million yen in October.

($1=85.49 Yen)

(Reporting by Risa Maeda; Editing by Ron Popeski)