The Nikkei reports that Toyota and Honda are both making estimated profits of about ¥300,000 (about US$3,100) each on every hybrid they sell, similar to what they make on small, gasoline-engined vehicles.
If Honda sells 200,000 Insight hybrids worldwide in the first year of its release, the company would generate sales of more than 350 billion yen [US$3.6 billion]. Since it estimates a gross profit margin of more than 15% on the car—priced at under 2 million yen&mash;its gross profit on Insight sales is projected to hit around 60 billion yen [US$622 million] in the first year, or around 300,000 yen per unit.
The gross profit earned on the Insight is still low when factoring in the large R&D costs involved in its development. However, the profit margin on its hybrid operations has risen to the level where Honda can count on it to generate the fourth-largest revenue stream behind its luxury, midsize and small car operations.
The Nikkei report said that Toyota appears to have earned gross profits of around ¥100 billion yen (US$1 billion) on its sales of second-generation Prius hybrids last year. Toyota’s gross profit margin on the sales of the next-generation 2010 Prius are projected to be in the single digits in the first year.