With customer demand for hybrid cars surging, several automakers -- including Toyota, General Motors and Ford -- are struggling to produce enough vehicles to meet the need, causing sales of many hybrid models to drop in May. Sales of the Toyota Prius declined 37.5% compared with May 2007, and sales of the Camry Hybrid sank 12.5%. In April, Prius sales increased 61% and Camry Hybrid sales rose 51%. Toyota says Prius sales slumped in comparison to a surge in May '07 because of a promotion designed to clear out inventory. But perhaps the biggest factor is that Toyota and …

Toyota will have gas-electric vehicles that can be recharged from a home electrical outlet on the road in the U.S. and Europe by 2010, according to company president Katsuaki Watanabe. They will use Lithium-ion batteries -- now common in laptops -- that produce more power and are smaller than the nickel-metal hydride batteries used in hybrids now. It will initially target leasing customers. Toyota also says it's setting up a research department later this month to develop an innovative battery that can outperform even that lithium-ion battery. Toyota is also working on fuel cell vehicles, which produce no pollution …

Struggling with sluggish sales across all its brands, Gap Inc. plans to close a handful of small stand-alone GapBody, GapKids and babyGap stores and consolidate offerings in its namesake stores to reduce square footage and boost earnings. "Having kids, baby, maternity, body, and adult in the same box makes sense," says CEO Glenn Murphy. "Today it's very clear to us this brand has got to come back together." By combining a 10,000-square-foot Gap adult and body store with a 5,000-square-foot kids-only store, Gap could save $225,000 a year in rent alone, he says. The San Francisco-based apparel retailer's …

General Motors is breaking a corporate campaign this month that addresses the oil-price issue head-on, albeit with a tongue-in-cheek twist. "Dear Oil," a new TV spot begins. "We've had this great relationship for many years. We think we will both be a lot happier and healthier if we see less of each other." The ad is slated to make its debut on NBC's "Meet the Press" June 22. A Chevrolet campaign focused on green issues also is about to break, and GM will tout its corporate environmental message as part of its NBC Olympics sponsorship, according to Kathryn Benoit, …

Apple CEO Steve Jobs yesterday introduced new iPhones that are designed to work over so-called 3G -- or third-generation -- wireless networks and have global-positioning technology built in. They will also support Microsoft's Exchange software, an addition that puts the iPhone in more direct competition with Research in Motion's BlackBerry and Palm's Treo smart phones and is intended to appeal to the business market. Most significantly, the iPhone will be $200 cheaper -- and come with satellite navigation, faster Internet access and other new features. An 8-gigabyte version with the new features will go for $199 when it goes …

Nissan is cutting output of its sport-utility vehicles in the U.S. and will increase production of the Altima. Its North America unit reported record May sales of 34,428 units for the Altima sedan, hybrid and coupe, up 38.3% from the same period a year earlier. One shift of workers in Nissan's Canton, Miss., plant will be moved to Altima production starting on June 23, with full output targeted for early September, the automaker says. The shift is expected to increase production by 2,000 vehicles to about 17,000 monthly. Separately, Nissan says it plans to launch its first clean-diesel …

Chrysler is planning an employee rally in honor of Lee Iacocca, 83, who was widely hailed as Chrysler's savior in the early 1980s but effectively banished when he joined Las Vegas billionaire Kirk Kerkorian in an abortive 1995 takeover bid for the automaker. The event will be June 26 at the company's Auburn Hills, Mich., headquarters. Iacocca -- never one to withhold or sugarcoat his opinions -- tossed barbs from afar during his time in exile, notably at Robert Eaton, his successor as Chrysler CEO, and Juergen Schrempp, the Daimler boss who orchestrated the ill-fated DaimlerChrysler merger. Chrysler's …

Food safety officials scrambled to reassure consumers that most tomatoes were safe and that search efforts for the origin of the contaminated tomatoes responsible for a rare strain of the microbe called salmonella saintpaul had moved into high gear. It is suspected of causing 145 cases of illness since mid-April. By Monday morning, McDonald's had joined thousands of other retailers by taking sliced tomatoes off all its sandwiches in its U.S. restaurants. Fresh salsa was suddenly in short supply. Supermarket produce sections were in disarray, and waiters were pressed to explain why certain menu items were unavailable. The …