American political pundit Arianna Huffington has done a great deal to propel the car into the spotlight for American audiences. In television advertisements, which started airing in the US right after the New Year, the Huffington-led Detroit Project (an ad hoc Hollywood group) equates driving a sport utility vehicle (SUV) to financially supporting terrorism. Lending support to the cause are fellow high-profile personalities Ted Turner, Leonardo DiCaprio, Cameron Diaz, Alicia Silverstone, and others, all sporting Prius subcompacts.
And that's good news for Toyota, which is one of only two carmakers (the other is Honda) currently manufacturing hybrids -- vehicles powered by a combination of gas-fueled internal combustion engines and electric motors.
Few SUV owners are rushing to trade in their gas-guzzlers for more fuel-efficient vehicles -- a CNW Marketing Research survey of 4,700 respondents found that only 1.8 percent of those who had seen the anti-SUV ads said they would reconsider before buying an SUV. But hybrid cars are emerging as the first alternative-powered vehicles to show signs of acceptance and Toyota is poised to lead the charge.
Last year, Toyota sold more than 20,000 Prius subcompacts, beating out Honda's Civic and Insight hybrid models in US sales. While January's political spotlight on Prius hasn't yet registered a notable sales boost, Toyota spokesperson Sam Butto says, "Sales have continued to be strong. They haven't taken a drastic leap upward in the last month, but they've remained steady -- we're currently selling about 1,500 to 2,000 Prius per month" in the US.
For now, Prius is short of being added to the mainstream lexicon, and hybrids still account for only a fraction of overall sales for both Toyota and Honda. About 150,000 have been sold worldwide since hybrids were introduced in 1997, but that is still less than the number of vehicles typically produced by a single auto factory in one year. However, as pressure from environmentalists and regulators mounts, and the impending war with Iraq looms -- threatening higher oil prices -- the climate for a hybrid improves.
Judging by recent announcements from both Ford Motor Company and General Motors to roll out hybrids, other carmakers are ready to embrace the technology. On January 7, GM said it would outfit a dozen models as fuel-efficient hybrids by 2007. Ford plans to introduce a gas-and-electric version of its SUV, Escape, at the end of this year. A 2002 survey by auto researcher J.D. Power and Associates found that 30 percent of new-vehicle buyers would "definitely" consider a hybrid electric vehicle.
But hybrids must still overcome a number of hurdles before they can penetrate the mainstream auto market.
First, there's price. While consumers expect to pay more for a hybrid than they would for a traditional gasoline-engine vehicle, there's a limit on the premium they'll accept.
"One of the challenges is making it affordable," Butto says. "Which we feel it is – now at US$ 19,995, but compared to Corolla [Toyota's closest conventional relative to the Prius'], it's a premium of about US$ 3,000 to US$ 4,000 for Prius."
According to the Union of Concerned Scientists, while full hybrids will cost an average of US$ 4,000 more than similar conventional vehicles, they will save their owner US$ 5,500 in gas over the car's lifetime. But even a US$ 1,000 surcharge can cause buyers lose interest, according to J.D. Power and Associates.
Another challenge Toyota faces is overcoming consumer misconceptions and misunderstanding about hybrids. "There are still a lot of people out there who don't know about [Prius], but obviously awareness is growing," Butto says.
Lack of familiarity with the Prius name aside, many people still think hybrid vehicles are the small, limited-range electric vehicles they saw or heard about in the past. Two years after the launch of the first hybrids in the US, almost 50 percent of J.D. Power survey respondents still believed (incorrectly) that hybrids needed to be plugged in to recharge the battery.
In addition, many consumers, particularly in the US, still prefer larger vehicles like SUVs for their space and comfort. Toyota currently offers a hybrid minivan, the Estima, in Japan, but has yet to release a larger-size hybrid elsewhere. However, the company recently announced plans to launch a luxury Lexus SUV next year that has the fuel efficiency of a four-cylinder compact (roughly 35 miles per gallon) and the performance of a V8.
The bulk of Toyota's sales are still generated from conventional vehicles, including SUVs. In fact, the recent publicity for Prius generated by the anti-SUV lobby could be perceived as a double-edged sword for Toyota. But as long as there is demand, Toyota says it will supply. "If no one wanted these things, we wouldn't be building them," Butto says.
Still, Toyota is committed to further developing hybrids for the future. "We strongly believe in hybrid technology as well," Butto says. "It's the right thing to do for the environment. I think fuel cells are the future, but that's still a little way down the road. Hybrids are the answer for right now, for their low emission standards."
As the current hybrid market leader, Toyota hopes to stay one step ahead of the competition. As the number four automaker worldwide by sales, it has already established a strong identity and earned consumer trust. Couple that reputation with its early-to-market advantage and Toyota is poised for future success with hybrid vehicles. Butto says the company will likely issue announcements regarding other hybrid vehicles in the near future.
"There is definitely a future for hybrid technology," he says. "If we didn't think it was going to be mainstream, we wouldn't be putting so much work into developing new ones."