Toyota's Ability to Meet Prius Demand Hindered by Quake
An excerpt from an article by Alan Ohnsman - Mar 30, 2011 12:22 PM PT
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A Toyota Motor Corp. 2011 Prius is seen on a vehicle displayed for sale at Fred Anderson Toyota dealership in Raleigh, North Carolina. Photographer: Jim R. Bounds/Bloomberg
Toyota Motor Corp.'s new Prius V hybrid wagon. Photographer: Jeff Kowalsky/Bloomberg
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Toyota Motor Corp. (7203) posted record sales of its Prius hybrid in the first two months of this year. Japan's strongest earthquake hindered the company's ability to keep that pace.
Rising gasoline prices, along with low-cost leases and loans, helped Prius sales jump 47 percent in the first two months of 2011. With most of Japan's auto production halted after the March 11 temblor and tsunami, Toyota may be unable to meet demand for the world's top-selling hybrid. |
"Toyota doesn't have enough vehicles to sell when demand for its cars, especially the Prius, is drastically recovering because of higher gas prices," said Koji Endo, a Tokyo-based analyst at Advanced Research Japan. "They can't take advantage."
The natural disaster that left more than 27,000 people dead or missing forced Japan's automakers to close factories due to shortages of parts and electricity. The Prius, rated by the U.S. government as getting 50 miles per gallon, and two new Lexus hybrids were the first models put back into production as Toyota tries to meet demand for its hybrid models.
The carmaker may still need weeks to restore Prius assembly to the pre-disaster level, said Jim Hall, an industry analyst at Birmingham, Michigan-based 2953 Analytics. Prius sales in the U.S. will likely end the year below the Toyota City, Japan-based company's initial target, Hall said.
Prius a 'Priority'
Steve Curtis, a spokesman for Toyota's U.S. unit, declined to say how soon Toyota might return to pre-earthquake production levels.
"We're going to do everything we can to minimize the impact of this situation for customers," Curtis said. The resumption of production of the model at Toyota's Tsutsumi plant in Aichi, central Japan, on March 28 indicates "Prius production is a priority," he said.
Toyota rose 2.3 percent to 3,330 yen yesterday in Tokyo trading, trimming its decline to 8.8 percent since March 10, the day before the quake.
Since its U.S. introduction in 2000, demand for the Prius has tracked gasoline prices, surging in 2007 and early 2008 when fuel prices rose rapidly, and falling in 2009 as retail fuel prices plunged amid a recession. The model's best year in the U.S. was 2007, when drivers bought 181,221 of the cars.
Toyota sold 24,174 Prius in the U.S. through February, compared with 16,452 a year earlier, according to Autodata Corp.
Gasoline Prices
Before the March 11 disaster, Bob Carter, Toyota's group vice president for U.S. sales, expected the Prius to match or even top the 2007 record, depending on supply.
"Demand is so strong right now that it is conceivable we could reach those kinds of numbers" in 2011, Carter said in a March 3 interview.
A gallon of regular unleaded gasoline cost an average of $3.59 in the U.S. on March 28, according to AAA's Daily Fuel Gauge website. That's up 17 percent from $3.07 on Jan. 1.
Toyota also made a renewed marketing push for the car in advance of the release of the Prius v wagon that's set for mid- year as the carmaker plans to introduce a hybrid line bearing the Prius name.
Interest in the Prius among online shoppers who were considering a new vehicle, surveyed by Edmunds.com earlier this month, rose more than 30 percent since the start of the year, the Santa Monica, California-based pricing and auto data service said March 18. That was about triple the 11 percent overall increase in consideration for hybrids and small cars, Edmunds said.
500 Parts
About 500 parts were in short supply in Japan after the temblor, Paul Nolasco, a Tokyo-based spokesman for the carmaker, said this week.
Toyota will build the hybrid vehicles at a rate of about 50 percent of normal capacity, Kyodo News reported March 28 without saying where it got the information.
Among Toyota factories making the Prius and key components for it, a subsidiary's battery plant in Miyagi, northern Japan, received minor damage during the earthquake, said Shiori Hashimoto, a Tokyo-based spokeswoman for the automaker. Toyota hasn't decided when production will resume, she said.
"One of the constraints for Toyota's hybrids is the supply of batteries," said Jeff Liker, an engineering professor at the University of Michigan in Ann Arbor, who specializes in researching Toyota.
Battery Lines
Two other battery lines closer to Toyota's manufacturing hub in central Japan were unharmed by the quake, Liker said.
"When you lose capacity, unless you have the ability to produce additional batteries, you simply cannot make up lost production," Hall said. "It's physically impossible to make up lost ground."
It is "possible but unlikely" that Toyota will match its 2007 sales of the Prius, Hall said.
A supply shortage would likely drive up prices for the model. The hybrid is selling at the manufacturer's suggested retail price, or MSRP, at dealerships including Atkinson Toyota in Bryan, Texas, said Paul Atkinson, president of the dealership.
Tom Ryan, managing partner of Metroplex Toyota in Dallas, said that may change if output doesn't recover soon.
"Production will dry up, so these cars will go for MSRP or higher," he said. "If gas prices go up, we sell these cars at MSRP. Other dealers will put an adjustment on it of $500 or a $1,000 above MSRP or higher."
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An excerpt from an article by Alan Ohnsman - Mar 30, 2011 12:22 PM PT
What Toyota Dealers are Saying?
General Managers of Toyota Dealers in Bay Area took additional allocations of Prius cars when supply in the U.S. surged last year. Every Toyota Dealer wishes they had taken a whole lot more; even largest Toyota Prius dealers in the country have a only few dozen or so cars on the ground, with fewer in the pipeline.
In the past Toyota Dealers have marked up Prius prices in the past when Prius inventory tightened.
Jonathan Latchford, general manager of the largest Toyota Prius Dealer located in Palo Alto, Bay Area, CA, foresees higher Toyota Prius prices & discontinuation of Factory Incentives, like rebates & special APR rates, due-to significant Prius shortages.
Lisa La, Director of Toyota Direct Sales at Toyota Dealer in Palo Alto, CA:
We strongly encourage our customers to take an advantage of the special offers being offered by Toyota Motor Sales as after Apr 4, 2011 all Toyota Prius incentives are expected to be discontinued until hybrid parts supply factories & assembly factories regain production capacity.
Due-to high demand & Limited Supply of Toyota Prius, take an advantage of Special Financing Rate 2.9% upto 60 mos or $500 Rebate.
To reserve your Prius & lock into current Toyota Incentives, call us today
650-494-2125
A Toyota Motor Corp. 2011 Prius stock photo as seen displayed for sale at Bay Area Toyota Prius dealership in Palo Alto's website.