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Toyota ’05 Goal: 300,000 Hybrids

Toyota Motor Corp. has set a goal of selling 300,000 gas-electric hybrid vehicles worldwide by the end of 2005, but production capacity may be a factor, Toyota president Fujio Cho said Wednesday.

“It may be difficult for us to produce (300,000) hybrids by that time, but we have another year to go so we’ll make every effort,” Cho told reporters through an interpreter after his prepared remarks.

Toyota also has raised its global vehicle sales target for the fiscal year ending March 31, 2005, to 7.2 million vehicles, an increase of 180,000 vehicles from an earlier forecast. Toyota sold 6.7 million vehicles around the world last fiscal year. National Post.

So, projected case, hybrids—not just the Prius, but also the two new hybrid SUVs (Highlander and RX400H)—will represent approximately 4% of Toyota’s new car sales in 2005. We’ve already heard that Toyota is bumping Prius production to 180,000 units (annualized) starting sometime next year.

Let’s assume that the Prius starts flowing off the assembly line at the increased volume in January, giving Toyota a full 180,000 units for the year. That leaves a minimum of 120,000 units to be split between the two new SUVs—say a hypothetical 60,000 apiece. That, or another production boost on the Prius line.

Are first-year numbers that large possible for a new model? You bet. Chrysler is doing it with the 300.

In 2003, Toyota sold approximately 120,000 Highlanders and 92,000 RX330s. The Highlander is tracking at about 11% growth this year, so let’s carry that over into next. That yields a projected 148,000 Highlanders in 2005. (Napkin math alert!)

Let’s take three scenarios, just for fun. The first is that the 60,000 hybrid Highlanders cannibalize standard Highlander sales—i.e., anyone who buys a Highlander hybrid was going to buy a Highlander anyway. The second is that the hybrid sales are incremental; 60,000 new buyers who otherwise would have purchase something else—maybe one of the few lucky to get a Ford Escape. The third is a, ahem, hybrid. Let’s say that 50% of the hybrid sales come from new customers.

Highlanders Cannibalize 50% Hybrid Incremental
Hybrids 60,000 60,000 60,000
Standard 88,000 118,000 148,000
Total 148,000 178,000 208,000
% Hybrid 41% 34% 29%
Brand Growth Y-Y 11% 34% 56%

Looks pretty good from an automaker’s point of view—those are profitable vehicles. Now, this may all be wildly optimistic in terms of looking at 60,000 hybrid Highlanders; Toyota may have a special manufacturing rabbit to pull out of its hat for the Prius next year. But it did make me ask myself:

Why, after being so long in the planning, and being able to see the same market conditions that Toyota does, is Ford launching its only hybrid product with a plans for a mere 20,000 units and maximum capacity of 25,000?

As posted earlier, Ford says it has supply chain problems. Well, Toyota had supply chain problems, too, but it also saw an incredible demand building and a major strategic opportunity. So it set about addressing the problem.

But let’s not just pick on Ford. Where are all the other hybrids?

Roland Berger, an international consultancy, recently released a new report: Automotive Engineering 2010. The report sees a further clustering of product, system and component development into global centers of excellence within the automotive industry.

Europe will continue to lead in the development of small front-wheel-drive cars, diesel technology and luxury vehicles. Small displacement engines, multi-purpose vehicles, and hybrid platforms will be led by Japan. OEMs will look to North America for the development of light trucks, SUVs, minivans, large segment vehicles and V-6 and V-8 engine families.

Absent some very focused and fast action, that sure looks like the outcome. I don’t think it is a particularly good one.


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