Raw Japan

Nissan’s hybrid conundrum

If Carlos Ghosn were a politician, pundits might be accusing him of flip-flopping right about now.

After spending the last few years playing up the merits of zero-emission electric vehicles and knocking down the hybrid hype, the CEO of Nissan Motor appears to be back-pedalling, ever so slightly, on that stance.

The reason? Hybrids have become just too popular to ignore.

The trouble started when the Nikkei, Japan’s premier business daily, reported last month that Nissan was aiming to develop a hybrid system for small and mid-sized mass-market cars, with plans to roll one out in Japan in 2011.

If true, that would signal a change in course for Nissan, which has only announced plans so far to mount its in-house-developed hybrid system on high-end, rear-wheel-drive vehicles. The company declined to confirm or deny the report.

But investors took it as good news, sending Nissan’s shares up 2.5 percent that day. After all, Toyota’s Prius and Honda’s Insight hybrid cars alone accounted for 13 percent of domestic sales in July, excluding the unique 660cc minivehicle segment. As long as the government’s generous incentives last, hybrids appear to be a sure winner.

The problem is, Nissan is loath to publicise that it’s taking that road. That’s probably because, coming a full 13 to 14 years after Toyota launched its first Prius, it’s questionable how competitive Nissan’s hybrid vehicles could be. The company would rather keep the attention squarely focused on its electric car business, which it expects to lead the industry in the zero-emission field when sales of the first model, christened the Leaf, start next year.

Hybrid, schmybrid – get on yer bike!

Can things get any worse for the car industry?

Just when you thought hybrid cars were all the rage in Japan, they’re being shoved aside for the environmental cachet by an even greener alternative: electric bicycles.

Motor-assisted “hybrid” bicycles are gaining traction thanks to a greying population and a growing interest in being green and healthy.

Last week, I got to test out one of these products at an event sponsored by Yamaha Motor. With a battery-powered electric motor to propel you, cycling up a hill while carrying two toddlers (or two 10-kg tanks of water, in my case) is a cinch. When the motor kicks in, it feels like someone is giving you a push from behind; and it never feels dangerous because the motor adjusts to the force and speed of your own pedalling.

Unlike the popular motorised bicycles sold in China, Japanese ones require no licence because the motor is made to switch off once the bicycle reaches the 24 km/hour legal limit for assisted riding.

“Once you’ve ridden one of our motor-assisted bicycles, you’ll never go back!” a Yamaha spokeswoman beamed, saying she’s been hooked to hers since her first ride. Yamaha Motor, based in the sleepy town of Iwata, near Mt Fuji,  is trying to encourage its employees to ditch their cars when commuting. “On a motor-assisted bicycle, a 20-km commute is a walk in the park,” another Yamaha official told me.

Mercedes? No thanks, I’ll take a hybrid

“I hope the next three months will be better for you than the last three,” Czech ambassador Jaromir Novotny told a gathering of Japanese car importers last month.

The way things are going, he’ll be hoping against hope.

In April, Japan introduced an “eco-car” tax incentive that has left all foreign car brands such as Volkswagen, Mercedes-Benz and BMW, neatly outside the fence of eligibility.

It’s the last thing they need in a market that’s already full of quirks that make life difficult for non-Japanese car brands: the existence of a huge and unique 660cc microcar segment, convoluted recycling laws and stringent regulations against what type of materials can be used in fuel tanks, to name just a few.

No one is complaining about incentivising low-emission cars. But what rankles outsiders is that the perks are based on an outdated fuel economy testing method that critics say is a poor reflection of real-life driving.

Toyota Prius: Will it live up to its name?

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.

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.

Honda’s Insight takes on Prius

It took almost 10 years, but Honda may finally have a hybrid hit on its hands this time.

The five-seater Insight went on sale this month in Japan ahead of other markets and orders have already climbed to 15,000, triple the number Honda hoped to sell on average in a month here.

That’s already just 2,000 shy of the total sales for Honda’s first hybrid car, also called Insight, in its seven years on the market from late 1999.  (The two cars share little more than a name.)

First-month orders are always an anomaly in Japan, where the shelf life for “newness” is punishingly brief. But if the Insight’s response is anything like what the second-generation Prius did for Toyota, Honda is in for a big boost to its already-green image.

So what’s Honda doing differently this time?

In a word, it’s affordability. While past hybrid cars have carried a price premium of roughly $5,000 and upwards over a similar gasoline-engine car, the new Insight starts at just 1.89 million yen ($19,700) in Japan.