Toyota aims to introduce four new gasoline-electric hybrid models in Japan and three overseas by the end of March. It also has plans for a low-cost hybrid, smaller and cheaper than the Prius, Akihiko Otsuka, the new Prius's chief engineer, said in February. It isn't likely to appear for three or four years, he added. Honda is introducing a hybrid version of the Fit compact car, smaller than the Insight, sometime after 2010.
"With more and more small cars crowding the market, a price war is inevitable," said Yuuki Sakurai, general manager of financial and investment planning in Tokyo at Fukoku Mutual Life Insurance Co., which manages the equivalent of $54 billion in assets. "Hybrids don't make that much money and may become a niche market."
With the Fit, Honda will have four hybrid cars in its lineup, including the current Civic hybrid and the planned CR-Z sports coupe. Toyota will have 14 passenger and commercial hybrid models, including the four to be introduced this year.
Profit Margins
Toyota earns about 100,000 yen in operating profit on the sale of one Prius. That's 7 percent of the profit it makes on the sale of a Tundra pickup truck, according to Endo.
The automaker, which is slashing costs by at least 800 billion yen this year, cut production-related costs for the new Prius by 30 percent, compared with the previous version, President Katsuaki Watanabe said when Toyota released its fiscal year earnings on May 8.
Toyota expects global sales to fall by 1.067 million vehicles to 6.5 million in the year ending March 31. Lower sales volume and a less-profitable model mix will cut operating profit by 800 billion yen in the year ending March 31 from the previous year, Toyota said. The company, which posted its first annual loss in 59 years last year, is predicting another loss in the year ending March.
Plunging vehicles sales have prompted countries including Germany, France, China and Japan to offer government incentives to help revive auto sales and meet tighter carbon-emission goals.
Japan plans to spend 370 billion yen to subsidize purchases of new, fuel-efficient vehicles to halt a 31 percent slide in vehicle sales this year through April.
"It's not easy to persuade consumers to buy a new car at present," said Daiwa's Kubota, "Automakers that can provide green cars will be the winners."
