Fuji Heavy Industries Ltd., the maker of Subaru cars, launched on Monday in Japan its first hybrid vehicle, the Subaru XV Hybrid, aiming to compete with domestic rivals who already have such cars.

The use of a motor assist function for the vehicle's gasoline engine provides a fuel economy of up to 20.0 km per liter, compared with 15.8 kpl for the gasoline engine model. The vehicle will retail for between ¥2,499,000 and ¥2,782,500, including sales tax, the automaker said.

Growing demand for fuel-efficient vehicles has made gasoline-electric hybrid cars popular.

Toyota Motor Corp. commands a dominant share of around 75 percent in the hybrid vehicle market, with its Prius and Aqua having been the two top cars in monthly sales rankings since April 2012.

Honda Motor Co. introduced a hybrid version of the Accord last week, while Mazda Motor Corp. is also expected to launch a hybrid model by year's end using Toyota's hybrid system technology.