As hybrids go mainstream, Toyota, Honda rush to produce smaller models

Posted by: Ian Rowley on May 27, 2009

In Japan, it’s getting difficult to make the case that hybrids are a niche for drivers keen to demonstrate their environmental credentials. In April, Honda’s new Insight, which want on sale in February, was the country’s best selling car (excluding 660cc minicars). Toyota, meanwhile, received a record 80,000 orders for the third generation Prius, which was launched last week. The previous record, held by a Toyota compact, was 47,000. Those numbers suggest, at least in Japan, hybrids are heading for the mainstream.

Just as telling: Honda and Toyota are revving up plans a new generation of smaller gas electric models. According to a local media report today, Honda will bring forward a hybrid version of its Fit compact by 18 months to the fall of 2010. The Nikkei newspaper, without citing its sources, says the Fit hybrid will sell for $15,800, compared to the Insight’s $19,900. Like the Insight, it will use a 1.3 liter engine plus the company’s IMA hybrid system. The reports add that Honda expects Fit hybrid sales of around 50,000 a year in its home market—roughly a third of the number regular Fits it sold in 2008. Toyota is working a Yaris-sized hybrid which could hit the market by 2011 and will likely be sold for a similar price.

That both are in the pipeline shows how quickly Toyota and Honda are bringing down the cost of making hybrids. Until recently, the notion that either could sell smaller hybrids without incurring losses seemed fanciful. After all, hybrid systems add cost and weight to any size car. For smaller vehicles, which are lighter and tend to be the least profitable in automaker lineups, the problems are obvious.

Yet, if the report is correct, it sounds like Honda is confident of eking out further savings on its system. For the new Insight, it got the “hybrid premium”—the cost of adding the system compared to a similar size car—down to below $2,000. That enables Honda to make as much profit from each Insight sale as it would from selling a regular Fit.

Toyota, too, insists it can compete in smaller hybrids. Speaking after the launch of new Prius last week, its chief engineer Akihiko Otsuka told me that critics had been wrong to suggest that its “parallel” hybrid system, which is more complex than Honda’s “mild” version, is too expensive for smaller cars. Otsuka said that while Toyota’s system uses two motors to Honda’s one, its hybrids don’t need a continuously variable transmission. That, he said, means that Toyota, despite using larger batteries, can make its hybrid system cheaply enough to use even in smaller cars.

Reader Comments

c.l.shannon

May 27, 2009 12:34 PM

i'm quite sure we'll soon be hearing from those wacky GM supporters out there touting the "Volt" as the detroit 'answer' to the toytoa and honda projects.

trouble is the "Volt" is pure vaporware - it's not a production model, its still a "concept."

never mind that the batteries are part of the reason for this status or that it will cost a modest 40K per copy or that it will be dogged by 'quality control' issues for the first 6 months. i hear those high IQ engineers at GM or looking into craming 40,000 AAA batteries into a Hummer and advertise it as a two-seater sports car (because of all the room the batteries take up). thi beast will have a range of a block and a half per 40,000 AAA refill and - with the help of a tailwind - reach speeds up to and including a brisk walking pace!

CanadaMark

May 28, 2009 2:43 PM

How far could Detroit be behind? Is it possible that with great quality and even better 'free advertising' the real car innovators of the world are moving forward again while the Volt remains vapourware and there is no chance of Detroit even competing with these offerings. Just another reason to forget NA iron and move on to car makers who think forward. (with the possible exception of Ford, the best of Detroit in any case)

Mike

July 31, 2009 1:44 PM

Detroit is behind because they are not focused on what consumer wants but has to focus keeping their head above water. While others like Toyota are focusing on Lean and

5S

while the Detroit group is focused on other stuff also Toyota has a great program in place for

floor tape

. Amy ways I hope they pull threw this.

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