Toyota rolls out lower-priced Prius amid heated battle with Honda+

TOKYO, May 18 Kyodo -
Toyota Motor Corp. rolled out a new Prius hybrid Monday amid fierce price
competition with rival Honda Motor Co.'s Insight, with Toyota pinning its hopes
on the Prius as the silver bullet to stem plunging auto sales.

The third-generation model of the world's best-selling gas-electric hybrid car
debuted on the Japanese market at a retail price starting from 2.05 million
yen, nearly 300,000 yen cheaper than the current lowest-end model and within
striking distance of the Insight hybrid's 1.89 million yen sticker price.
The automaker is aiming for a monthly sales target of 10,000 units of the new
Prius in Japan. It hopes to sell about 300,000-400,000 units of the entire
Prius range and a total of about 500,000-600,000 units of hybrid cars worldwide
in 2009.
The new Prius will also be sold in North America and other parts of Asia from
later this month and in Europe from June. The company aims to sell the
third-generation models in more than 80 countries and regions, compared with
the current Prius which is sold in more than 40 countries and regions.
''Even before sales began, we have already received more than 80,000 orders
(for the new Prius models) so we have been able to make a start exceeding our
expectations,'' Toyota Executive Vice President Akio Toyoda, a member of the
founding family who will replace Katsuaki Watanabe as president in June, said
at a press conference in Tokyo.
Toyota, a pioneer in the hybrid car market, hopes booming sales of the new
Prius will help the company turn itself around as it is anticipating a
staggering group operating loss of 850 billion yen for the current business
year.
Japan's top automaker has sold over 1.25 million units worldwide since the
launch of the first-generation Prius in 1997.
The company also announced the same day that it will introduce a new grade of
its second-generation Prius -- newly dubbed the ''EX'' -- that will be
available in Japan from June with the same retail price as Honda's Insight.
Even with a lower price tag, the new Prius has a larger 1.8-liter engine,
rather than the current 1.5-liter engine, and achieves fuel efficiency of 38
kilometers per liter, an improvement of around 7 percent from the current
Prius.
Unlike previous Prius models, the new hybrid will also be sold through all of
its nearly 5,000 Toyota dealer channels nationwide, a new policy Toyoda has
emphasized.
''We have been able to bring the starting price closer to a price that
customers would really feel they want to pay,'' Toyoda said. ''I'm very
relieved we made it in time.''
On the back of recent government tax breaks and promises of more subsidies to
come for drivers buying fuel-efficient cars, hybrids in Japan have enjoyed
solid sales, beating the severe downward trend in the overall auto market.
The revamped Prius, priced between 2.05 million yen and 3.27 million yen, will
be about 160,000-220,000 yen lower per unit when the new tax breaks are
applied.
Honda's Insight hatchback became Japan's bestselling vehicle in April and
clinched the No. 1 slot for the first time as a hybrid car, according to data
released by the Japan Automobile Dealers Association. Company officials have
also said that orders for the Insight have topped 30,000 units since its debut
in February.
Research institute Fuji Keizai Co. recently forecast that global sales of
hybrid motor vehicles will see a 7.6-fold jump to 3.75 million units during the
12-year period to 2020.
In April, Honda Executive Vice President Koichi Kondo welcomed the price battle
with Toyota, saying hybrids now need to ensure a cost benefit to raise their
presence in the car market.
Honda plans to roll out a CR-Z hybrid sports car next year and a hybrid version
of the Fit compact or the second-generation Civic hybrid at an undetermined
date after 2010.
Meanwhile, Yoichiro Ichimaru, Toyota's senior managing director, admitted
Toyota may no longer be at the forefront of deciding hybrid prices with the
debut of Honda's Insight and said that pricing was affected by its competitors.
Analysts said Toyota's new Prius is likely to become another bestseller, but
warned the price tag topping 2 million yen may turn out to be a disadvantage
for Toyota at a time of economic recession.
''The Prius certainly has much higher performance, but it is more expensive and
most consumers tend to be quite price-sensitive these days,'' said Shigeru
Matsumura, an auto analyst at the SMBC Friend Research Center.
And questions remain over whether Toyota's production capability will keep up
with the ''explosive'' demand for the Prius as Ichimaru said it would take
about four months before the 80,000 orders are delivered.
Matsumura also said the popularity of the Prius may help to lift the entire
languishing auto market, but warned the company's earnings may not necessarily
improve if sales focus only on hybrids, which do not have high profit margins.
''There are so many more profitable car models so it would not be good if they
are not sold and only the Prius is successful,'' he said.
==Kyodo