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A Decade After First Prius, Toyota's Hybrid Sales Hit 1 million

By YURI KAGEYAMA
AP Business Writer

TOKYO (AP) - A decade after the first Prius went on sale, Toyota's global sales of hybrid vehicles have hit a landmark 1 million, underlining the Japanese automaker's lead in "green" technology that has changed the face of the auto industry.

Toyota Motor Corp.'s cumulative sales of gas-and-electric-powered vehicles totaled 1.047 million as of the end of May. Of those, nearly 345,000 hybrids were sold in Japan, while 702,000 were sold abroad, the company said in a statement Thursday.

Sales of Toyota hybrids have climbed from just 18,000 in 1998 to 312,500 last year, the company said.

Toyota's plant in Georgetown, Ky., began producing Camry hybrids last year.

Demand for hybrids, which deliver superior mileage by switching between a gasoline engine and electric motor, has soared amid higher fuel prices and greater consumer concern about pollution and global warming.

Toyota's dominance in the category has driven Detroit's automakers to follow with their own versions and to rely less on lower-mileage SUVs as the main engine for their profits.

"Toyota is clearly ahead of the pack in hybrids," said Tsuyoshi Mochimaru, auto analyst with Deutsche Securities in Tokyo.

The Prius is the overwhelming leader in the category, with a total of 757,600 units sold since its 1997 introduction in Japan. Toyota began selling the Prius in North America, Europe and other places in 2000. Last year, the model made up more than 40 percent of hybrid sales in the U.S.

The Prius, which gets 55 miles a gallon on combined city and highway driving conditions, has been enormously popular as a mid-size sedan, a best-selling vehicle category.

Although most automakers are working on hybrids, Toyota has the advantage of almost 10 years of experience in selling the technology, and in using feedback from drivers to make improvements, rather than relying on information from labs.

Toyota has placed a large emphasis on hybrid technology: It offers several other hybrid models, including the hybrid Camry and hybrid Lexus models.

"Hybrids will play a key role throughout our lineup," Toyota spokesman Paul Nolasco said. "That means all vehicle categories."

The company also started domestic sales of its most expensive hybrid, the 15 million yen Lexus LS 600h. It will be exported over the summer, according to Toyota.

Not all hybrids sell well. Earlier this week, Honda Motor Co. said it will discontinue the hybrid version of its Accord sedans, which sold poorly because it didn't fit the customer demand profile of the smallest, least expensive hybrids with the highest gas mileage.

Hybrid sport-utility vehicles have struggled in sales compared to the Prius, partly because an SUV doesn't have a green image to start with, analysts say.

Sales of Toyota's RX400h hybrid SUV, sold as the Harrier in Japan, have reached 85,000 worldwide since it was introduced in 2005. Another hybrid SUV, the Highlander, or Kluger in Japan, has sold 67,000 over the same period.

The Prius, by contrast, has sold 478,800 units since the start of 2005.

Among American automakers, Ford Motor Co. has the hybrid Escape sport-utility vehicle and General Motors Corp. sells the hybrid Saturn Vue Green Line sport-utility vehicle and hybrid trucks.

GM has also promised four new hybrids this year, the two-mode gas-electric systems in the Chevrolet Tahoe and GMC Yukon large sport utility vehicles, and hybrid systems for the Saturn Aura and new Chevrolet Malibu sedans.

Yasuaki Iwamoto, auto analyst with Okasan Securities Co., said that rivals will have a hard time catching up to Toyota in hybrids - and that the techology will play a key role in defining Toyota in the years ahead.

"Ecological features are going to be very important for building Toyota's brand image amid intensifying competition, and Toyota will continue to push the hybrid to the forefront," Iwamoto said.

Toyota has repeatedly stressed that the hybrid holds more potential than the diesel or other innovations.

Iwamoto said it remains unclear what will be the dominant ecological technology in 20 years time, however.

"No one knows what will become the standard, or even if there are going to be several types of technology that will become the standard," he said.

The next innovation in hybrids is expected to come from a new type of battery, called the lithium-ion battery, which will be smaller and lighter than the nickel-metal hydride batteries Toyota now uses for its hybrids.

A major breakthrough is needed to switch to lithium-ion batteries, now widely used in laptops, to make them power cars.

Mitsuo Kinoshita, a senior Toyota executive, recently denied Japanese media reports that Toyota had given up on having a lithium-ion battery system for the next-generation Prius.

"We're still working on it," he told reporters.

(Copyright 2007 by The Associated Press. All Rights Reserved.)


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