Raw Japan

Slices of Japanese business, politics and life

Toyota Prius: Will it live up to its name?

March 26, 2009

When Honda‘s new Insight hybrid debuted in Japan last month, many journalists referred to it as the “Prius fighter”. Less than two months later, we’re talking about Toyota’s battle to come up with the “Insight fighter”. What gives?

In a word, it’s because Toyota has suddenly begun behaving like a follower — not a leader –in the hybrid field that it has owned for the last 12 years.AUTOSHOW/

Toyota is reportedly planning to knock about $3,000 off the price of the next Prius, a name that means “to go before” in Latin, to 2.05 million yen in Japan to bring it closer to the Insight’s price range.

Toyota President Katsuaki Watanabe declined to confirm that at a news conference today, although his roundabout response about having lowered costs and the fierce competition it faces from the Insight seemed like a tacit acknowledgement that the reports were true.

What he did confirm beyond doubt was that Toyota would keep selling the current, 6-year-old Prius in Japan even after the new version comes out. Media reports say that one would be priced right smack in line with the Insight’s 1.89 million yen.

Selling two versions of the same car is rare. When I asked executives in the United States and Europe a few months back, they said they had considered doing it but decided against it because it would be too confusing for the consumer. Watanabe wouldn’t comment on Toyota’s intention outside Japan.

In any case, the reported pricing strategy, if true, would signify a complete reversal of Toyota’s initial plans. High-ranking executives had told me over the months preceding the Insight’s early-February launch that the next Prius would cost more, not less, than the current variant.

And why shouldn’t it? The remodelled Prius is roomier, quieter, and carries a more powerful engine – 1.8 litres versus 1.5 litres – and still gets U.S. listed mileage of 50 mpg, topping its predecessor’s 46 mpg.

Those features are why Toyota executives have said all along that the Prius is not comparable to Honda’s Insight, and rightly so. The Insight gets less mileage (41 mpg) despite having a smaller, 1.3-litre engine, and feels cramped in the rear even though it’s just 7 cm (2.8 inches) shorter than the new Prius. Does Toyota really need to change its tune?

It’s no secret that hybrid cars are less profitable than their conventional gasoline-engine cousins. So if Toyota chooses to compete head-on with the lesser Insight on price, it would no doubt be tightening its own noose.

Maybe it figures that losing the image race could be even more detrimental than losing out on fatter profits. Or maybe it just couldn’t stomach the Insight’s outranking the Prius in Japan’s top-sellers’ list in February.

But intentionally shoving the Insight out of the race would also contradict Toyota’s claim that it wants to see more hybrid cars from competitors under the notion that that would help catapult the technology out of the niche and into the mainstream.

If Toyota does end up coming down in pricing by the kind of margins that have been reported, it could risk hurting the Prius’s hitherto spotless name — a name that has become practically synonymous with hybrid technology over the years. AUTOS-LASHOW/

I’m no expert, but even I could tell after test-driving the final prototype of the next Prius that it was in a different class from the Insight. I recall a motor journalist telling me that even the current Prius was “dynamite” –- a real and rare game-changer — when it came out in 2003.

The “wow” factor in the new Insight, on the other hand, was wanting, he said. Why not charge a big premium over the Insight?

Where Honda did go right, though, was having the insight (pun intended) to offer a more affordable hybrid car during the worst economic crisis in decades, which has driven down car sales globally.

But surely, with the upcoming Prius, Toyota could also stay true to its name by acting like the pioneer and leader that it is.

Photo credits: Prius (top) REUTERS/Rebecca Cook; Insight REUTERS/Jacky Naegelen

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •