Toyota won't drop hybrid prices, as consumer interest wanes

Auto123
Alex Law
June 16, 2006

Toyota wants to double its hybrid-electric vehicle offerings by 2010 and will consider a plug-in variation, but apparently has no plans to reduce the premiums it charges for them in the immediate future.

This means that all those Lexus and Toyota hybrid models sold in Canada and the U.S. will keep contributing to the billions of dollars in profits that go to Japan every year from this continent, while making it hard to impossible for Canadians to recover their extra cost through reduced fuel use.

Speaking at a conference in Japan, Toyota's president, Katsuaki Watanabe, said that further market penetration of hybrids "calls for solutions to numerous remaining issues. For example, we are aiming to downsize system components and slash their costs in half in the next-generation models."

Given the recent cadence of Toyota's hybrid launches, that means not much is likely to happen on the price front for a couple of years at least, unless consumer pressure is applied.

That just might happen, since a recent study shows that consumer interest in hybrids is dropping in general, and so is the amount they're willing to pay.

According to CNW analysts of Portland, Oregon, hybrid consideration among everyone intending to buy a new vehicle in the U.S. has been dropping steadily for months. Consumer interest in hybrids reached a high of 39.16 percent in November 15-30, 2005, but by May of this had dropped to 21.62 percent.

It's also interesting that the American consumers who still show an interest in hybrid vehicles have significantly reduced the amount they're willing to pay. The high was $3,142 (all figures in U.S. dollars) in late September, 2005, according to CNW, but it's been dropping steadily ever since and in May was down to $1,957.

Roughly speaking, Toyota charges premiums of $3,000 to $8,000 for its hybrids in the U.S.

On top of all that, says CNW, only about six percent of the people with hybrids on their shopping lists ever actually buy one, while most non-hybrid models score over 60 percent and some brands (including Toyota) score beyond 80 percent.

Perhaps if buyer interest in Toyota's hybrid products continues to drop, Watanabe will have a change of heart.

The company has already decided to respond to consumer interest in a developing plug-in capability for its hybrid system, which allows it to be plugged into the domestic electricity grid for a battery recharge. At the moment, the batteries of commercial hybrids are charged while the vehicle is running on its gasoline engine.

The theory with a plug-in is that it would allow the hybrid to recharge over night and run purely on battery power only during the day in light urban use, since its range would only be about 40 to 50 kms.

"In terms of reducing dependence on petroleum and helping to reduce CO2 and abate atmospheric pollution," Watanabe said, "the effective use of electrical energy is yet another option. By combining electrical energy with hybrid technology, we see that there may be potential for the new technology of a plug-in hybrid vehicle that would be rechargeable from an external electrical supply."

Many battery technology issues remain, Watanabe noted, "so widespread implementation of plug-in hybrid vehicle technology will not be immediate. However, our current hybrid technology, which already includes a full electric drive mode, hints at the future potential of plug-in hybrids."

As a result, Toyota's president said, "We are currently furthering R&D regarding plug-in hybrids as representing a technology that may prove to be another way we can reduce CO2 and minimize air pollution, particularly in urban areas."