Toyota Expands Hybrid Market with New Bigger Prius

 

Toyota rolled out the revamped Prius on Monday, and said it already had 80,000 advance orders in Japan for the remodeled hybrid amid intensifying competition with Honda’s rival offering, the Insight.

The world’s largest automaker said it aims to sell up to 400,000 units globally a year of the car.

“We are resting the future of cars in this model,” said incoming president Akio Toyoda, the grandson of the company’s founder, who drove the new model onto a stage at a packed Tokyo showroom.

Both Toyoda’s presence and the new Prius are symbolic of Toyota Motor Corp.‘s pursuit of a turnaround from its worst annual loss since its 1937 founding.

The Prius, now in its third generation since its 1997 introduction, is the best-selling gas-electric hybrid in the world, racking up a cumulative 1.256 million units sold in more than 40 nations and regions. The new Prius will be sold in 80 nations and regions, Toyoda said.

But now Toyota faces a challenge from Honda Motor Co., whose more cheaply priced Insight has sold briskly since it was introduced in Japan in February. In April, the Insight ranked as the top-selling vehicle in Japan — the first time a hybrid clinched that spot.

Toyota said its Japan prices for the Prius would start at 2.05 million yen, or about $21,600, less than its predecessor model’s Japan base price.

But in an unusual move aimed at competing against the Insight, Toyota also said it will continue to sell the current Prius in Japan — mainly to corporate and rental customers — and cut its price to 1.89 million yen, the same price as the Insight.

In Japan, Toyota is hoping to sell 10,000 of the new Prius a month, and an additional 2,000 of the cheaper old-style Prius.

The Japanese government is offering incentives to encourage people to buy green cars, which is expected to help the Insight and Prius sales here.

Christopher J. Richter, senior analyst with Calyon Capital Markets Asia in Tokyo, said Toyota may be making a mistake by competing with Insight’s price because the Prius is a much bigger car than the Insight compact and gets better mileage.

“Given that the two vehicles are different animals, I think that probably isn’t the way to go,” he said. “It probably damages the Prius brand image by trying to chase after what is an inferior car in price.”

Richter also noted that Toyota faces some challenges in selling the Prius not only because of the competition from the Insight but because of the global slowdown and a decline in oil prices.

Ravaged by a global slump, tight credit in the critical U.S. market and the strong yen, Toyota racked up a larger-than-expected 436.94 billion yen ($4.4 billion) loss for the fiscal year ended March 31, a dramatic reversal from the record profit of 1.72 trillion yen it earned the previous year.

Toyota had already given the U.S. prices for the 2010 Prius — starting at $22,000, unchanged from the base price for the 2009 model. It is also promising a more basic U.S. model as well for later this year starting at $21,000.

The Insight, which is smaller than the Prius, carries a lower manufacturer’s suggested retail price of $19,800 for the base model in the U.S.

Honda has sold 19,492 Insights in Japan since it went on sale in February, and 2,665 in the U.S. since March.

“We’ve come up with a price that we think is close to what will make people happy,” Toyoda said.

Toyoda, 53, was tapped in January to take the helm at the world’s biggest automaker, the first time in 14 years it has turned to the charisma of its founding roots for top leadership — mainly to bring employees and affiliates together and steer the automaker through deep troubles.

The new Prius gets a combined 50 miles per gallon, compared with 46 mpg for the 2009 model, according to Toyota.

It does even better under Japanese government testing standards. Hybrids, by going back and forth between a gasoline engine and electric motor, tend to offer better mileage in slow-speed and stop-and-go driving common on Japanese streets, rather than on highways — just the reverse of conventional cars.

Toyota is promising 38 kilometers per liter, which converts to 90 miles per gallon, in Japan, for the latest Prius.

Underlining its determination to compete with the Insight, Toyota showed a clip from its Japan TV ad at Monday’s Prius event, which showed Superman zooming around a city before returning to his human form as Clark Kent, the reporter, with a scoop about the car’s low price.

Toyoda hinted there may be a wait for the Prius.

“I already ordered mine,” Toyoda said. “If you want yours before the end of the year, go rush to your dealer.”

5/18/2009 4:44 AM YURI KAGEYAMA AP Business Writer TOKYO