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Softer Hybrid Demand Could Mean Better Deals for Consumers. (http://abcnews.go.com/Business/WNT/story?id=2869432&page=1)

http://www.cleanmpg.com/photos/data/501/2006_Toyota_Prius_II.jpgDean Reynolds - ABC News - Feb. 12, 2006

Toyota anticipated strong market demand and ramped up Prius production -- but now supply has moved past demand for the hybrid car.

Jonathan Keyes surveyed the Santa Monica Toyota dealership the other day and was surprised by what he saw. Row upon row of unsold Priuses, Toyota's supposedly hot-selling hybrid.

"When I came into the lot, I won't lie," he told us. "I was absolutely surprised. I thought that maybe I could just test drive [a Prius].

"But the car salesman who was helping me said, 'which one do you want?'"

It is a scene that is being replayed across the country these days, as consumers, once accustomed to paying more than the sticker price and waiting half a year for a Prius, are now being told to take their pick, which could bring better deals for those looking to purchase the hybrid car.

"There's no question that demand for the Prius is not as high as it was, say, a year ago," explained Jesse Toprak of the auto Web site Edmunds.com.

There are several reasons for this, but the main one involves the price of gasoline.

All summer long, when you couldn't find a Prius to save your soul, the price of a gallon of gasoline hovered in the neighborhood of $3. But steady declines in gas prices have brought the average price per gallon down to around the $2 mark — and that's a problem for Prius.

"The No. 1 reason people will buy this vehicle is gas mileage," said Brian Weinberg, general manager of Grossinger's Toyota in Chicago.

Toyota anticipated strong market demand and ramped up Prius production — pushing supply past demand. Today, it takes an average of 30 days to move a Prius off the lot. Adding to the glut, Toyota responded to repeated consumer complaints that they just couldn't find the car. Unfortunately for dealers, Toyota's response came a tad late.

More Supply? Prepare for the Deals

Sales of Prius have been flat for a year, but according to Jim Press, president of Toyota Motor North America, that's no problem.

"Now we can start to satisfy consumer demand and start to sell in the mainstream," Press contended. "Obviously, what we're trying to do is to bridge from the vehicle that was attractive to environmentally conscious customers to the mainstream."

To do that, Toyota dealers will be doing something unprecedented — they will be offering incentives to Prius customers. The incentives, offered by specific dealers as need be, involve loans and leases, as well as dealer discounts from the sticker price.

"We're now in a more normal situation where demand and supply reflect reality and that requires marketing," Press said.

The question though is whether Prius is more than a niche vehicle, whether it can expand to the mainstream as Press wants. It will be difficult. For one thing there is plenty of competition, not only from other hybrids but also from cheaper, gas-saving vehicles now on the market. Vehicles like Toyota's own Yaris, Nissan's Versa, and Honda's Fit.

"You might as well just get a four-cylinder regular car for $16,000 or $17,000 and get very similar gas mileage to those hybrids without having to pay the premium price," said Toprak.

There is also the fact that the federal tax credit for the purchase of hybrids is being phased out this year just as the Environmental Protection Agency is due to come out with revised mileage calculations — a double whammy.

The EPA figures are designed to better reflect driving habits of motorists. Bad news for Prius and the hybrid fleet as a whole.

Today on the sticker of a new Prius you will read EPA mileage of 60 miles per gallon in the city and 51 mpg on the highway. But the new EPA figure is expected to be no higher than the mid-40s for either.

Toyota insists that's a good thing. The Prius will get the mileage it's always gotten, Press insisted, and there won't be any customer disappointment about not getting 60 mpg. But selling a 30 percent reduction in miles per gallon will be daunting even for the marketing wizards at Toyota.

I'm sitting here in Librrtyville Toyota (what Priapus calls "the doctor") and I watched this article on the news. The teaser was something like, "and when we return, a year ago the Prius was red hot so why are they sitting on dealers' lots this year?"

The reason, it turns out, is that Americans are short-sited and driven more by their wallet then their lungs and national security.

Hi Tony:

___When I saw the clip on ABC News tonight, I just had to post it ;)

___To me, this screams BUY! BUY! BUY! Peak Oil and GW are not going away and with the current tax incentive and great deals to be had, anyone considering a new car should be all over this! If I could only get rid of this #%( @$%#! $*)%(*! MDX!!!

___Good Luck

___Wayne

Heh. I guess I should have waited two months!

Toyota needs to get more people to drive one of these little beasties. It's an extroardinarily hard car to fault once you've had a little time behind the wheel. Or, as in my case, carried around the quantity of stuff and people some people think they need a SUV for.

I don't know, maybe Americans need the point driven home a little harder than $3 gas can do. Maybe it takes $4 or $5. Or perhaps no gas at all for a little while. I mean, I don't know what it was this weekend but I saw SO MANY HUMMERS driving around between here and Rhode Island. Shiny freaking new ones, and not just H3s. Plenty of H2s, too. It's not like these people need to downgrade to a Geo Metro or even a Prius to make a difference. Anything that suits actual needs as opposed to glassy-eyed wants would be better.

Today the BBC was reporting on suggestions that BMW is committing suicide because their cars are too big and powerful, thus burning too much fuel and turning efficiency-minded Europeans off to the whole line. I just thought it was interesting.

brick,

I'm suprized to hear aboutg so many Hummers in NE - I thought it was Volvo country.

___________________________________________

So many in the United States of Amnesia forget how quickly the price of oil could shoot up past it's current $60 a barrel

- Two aircraft carriers are off the coast of Iran. Preparing to strike nuclear plants?
- Another Katrina or above average frequency of hurricanes hitting populated areas.
- An unfriendly nation like Venezula could cut back or cut off.
- Various other hot spots like N Korea
- Emerging economies like China and India will prevent a buffer in the oil supply (i.e. peak oil)

Americans have short term memories .

My local dealers' stock has increased but I wouldn't say they are so saturated that they have to give them away. For a long time they had 3 or 4 in stock at any given time. Today they seem to have 7 to 9 in stock at a time.

Hi Antrey:

___Because the one dealer has 9 and the dealer the next town over has 6 and the dealer in the town just to the south has 13 … It is competition and the Prices Paid and Buying experiences forums are lighting up with invoice like numbers all over the country. Nobody gives them away but when all the dealers have a few on the lots, you are now in control of the “Sale or no Sale” status vs. the other way around which has been the case for years. Halleluiah as it is about time!

___Watch the following vid over at EV World for an idea of why I think the Prius is a screaming bargain right now …

The Challenge of Building Green Cars. (http://www.evworld.com/view.cfm?page=article&storyid=1127)
Speaking about the recent drop in gasoline prices in America, Reinert commented that light truck and SUV sales have already begun to rebound. He remarked, “What can I say, sheep are meant to be shorn.”
___Good Luck

___Wayne

Ive spent more than my fare share of time on auto lots of late. The yota lots are loading up on all there hybrids and Yaris is setting around all over the place. On the Honda lots I found it strange that Si's, sedan and coupes are piling up. Along with Standard Civics. Fits arent very popular here. You see a few. but i just dont think the dealers really want them. As one would think with Americans. the SUV's and Trucks are selling again in droves. The Pilots, CRV and Oddys are flying off the lots. Same with Yota's offerings. And my goodness are the burbs and hoe's sailing off GM lots. The Rampage of Hummers has slowed down. For a long time they were everywhere. I think they are even weak here in the used markets.

I would not mind it so much if I ever saw a SUV, VAN or large Quad Cab truck loaded to the gills with humans and cargo. But they are 99% of the time empty. and to think I have to drive the gas sucking Ranger one day this week for a furniture run. Atleast the wife and I will both be in the cab....

psy

Speaking about the recent drop in gasoline prices in America, Reinert commented that light truck and SUV sales have already begun to rebound. He remarked, “What can I say, sheep are meant to be shorn.”





There's a quote to remember. It just boggles my mind how much we (in the general sense) are ambivalent about things, okay everything, until these things start to impact the pocketbook. A year or more after a $3.00/gal "scare" and people go back to SUVs. Because 99% of people who get them "need" them. :mad:

I agree, if anyone's been waiting on a Prius, now is a fantastic time. Maybe even the best time.

...I agree, if anyone's been waiting on a Prius, now is a fantastic time. Maybe even the best time.

It will be like when I bought my Insight in September 2000 and hardly anyone cared when gas was under $1.50 a gallon.

Yes, I saw Prii sitting on the lot at the Toyota dealer. I'm sure that if it weren't snowing I would have been able to find a HyCam or three.

But trust me, this is nothing, NOTHING(!), like the dozens upon dozens of Hummers and Escalades parked on the Weil Hummer lot. Some of which I know have been there are at least a full year. Others are H2s from years gone by.

At least we know that when gas gets expensive again, people will get interested in the hybrids. I can not think of anything that will increase Hummer sales in the future.

Hi Tony:

___That Libertyville Hummer dealership disgusts me :mad:

___Did you notice if Libertyville had an 07 Salsa Red or Super White - Touring w/ package 5 or 6 on the lot while you were there last night/today?

___Good Luck

___Wayne

This will not be a happy Valetine's Day for Chrysler as they are going to announce as many as 10,000 to be laided off today. :( Two plants will be shut down.

Like Tony said, I've felt the pain of unemployment and don't wish it on others. To do that, you need to anticipate where the market is going and adapt before you are left behind. A few snippets from this MSNBC story...

Atop almost everyone’s list for closure is the 2,100-worker plant in Newark, Del., that assembles the slow-selling Dodge Durango and Chrysler Aspen mid-sized SUVs. Analysts say the Mack Avenue Engine Plant 1 in Detroit, with about 530 employees, also is a possibility because it makes the 4.7-liter V-8 engines that go in slow-selling trucks.

Erich Merkle, an industry analyst with the auto consulting company IRN Inc. in Grand Rapids, said a 2,330-worker plant near St. Louis in Fenton, Mo., that makes Ram pickups also is on his list because Chrysler has two other plants that make the Ram.


I overlook things, but was their a mention of cutting back any cars? A few people are trying to point at Prius demand and say people don't care about fuel efficiency. Ford's outlook is grim because they are the most truck-heavy automaker - GM might be realizing this with the Volt concept (remains to be seen). It's painfully evident that Chrysler has a glut of gas guzzlers.

Demand for the Prius has dropped, but has overall hybrid demand fallen? I'm not sure, but it definitely seems to have diversifed with more hybrid choices. There are a lot of people that are simply trading to conventional fuel efficient vehicles. While a lot of people are not yet willing to try hybrids, it seems like more are shedding gas guzzlers.

Read an account of a couple of people during Katrina making a 1000-mile trip from Orlando to Bryan, Texas. It cost a Prius $22 and two stops. A buddy in a Dodge Ram 2500 made seven stops and paid $539. :eek: Why is Chrysler in trouble?

There is a GM apologist at PriusChat - he may be a dealer. He will argue until past the cows come home that Toyota also makes gas guzzlers (correct), and that the US trade balance heavily favors Japan and China. He conviently has a blind eye to the fact we still pay more for OPEC oil than to China. China is not a breeding ground for terrorists and nether is Japan. I don't get an answer from him when I ask hiim the question: "why can't Detroit bulid a made-in-USA 40mpg+ sedan that lasts 200,000 miles so we can't stop sending our money to China, Japan, or the Middle East?"

If you want to remain in business, you give the customers what they want. Detroit is in trouble because they are attempting to tell the customers what they want and it's not working.

Prius sales off?

Is Toyota in trouble?

Bankruptcy? :p

dang, i would love to try one, but being halfway through the payments on the civic, i can't see doing it.........unless i get a good offer on the civic......

Hmmm, wish I had some extra $$. I would sure like to have one of the new 'slightly stretched" Prius.

My impression is that pickups and SUVs are still not selling.I suspect the poor economy is partially to blame. Folks memories are short, but not that short. I haven't seen any increase in the prices of used Suburbans. A 4 year old one with low miles still sells for maybe 30%($12,000,$13,000) of the over $40,000 the original owner paid for it.

In a year or so once the economy improves gas will start up again.
Charlie

I find my self in a quandry...

My daily driver (Ranger) is paid for. My rarely driven towing vehicle is not (Dodge Ram). I do need the Ram (I think), but only drive it when I need to.

My financial situation is sufficient, but I do not have enough money to replace the Ranger. Unless the gas savings will be enough to make the car payments, I can't afford it. In a couple of more years the maintenance costs on the Ranger will change that equation, but until then...

Maybe the mainstream don't like or want the Prius and only buy them when forced by fear of high gas prices?

Its not the cost of gas its the economy.

Most people are putting off big purchases, which pretty much includes ALL cars, hybrids or conventional.

I grew up in the Tupelo, MS area (actually Blue Springs area) where the new Prius factory is being built. My brother-in-law, who works in construction related industries tells me that it is common knowledge in New Albany and Tupelo that Toyota has slowed their pace. They should be announcing plant delays soon. Sad. Looks like the combination of cheap gas and tapped out consumer financing is cutting into Prius sales - and Toyota is reacting predictably.