Posted by: Ian Rowley on January 08, 2010
Here in Japan there is no denying that the third generation Toyota Prius is a smash hit. Earlier today, official figures showed that the Prius, underpinned by hefty government incentives and market leading fuel economy, was the best-selling car in Japan in 2009, with Toyota selling almost three times the 2008 number. Even more impressive, Toyota beat the perennial top selling Suzuki WagonR, a 660cc minicar, into second place - despite the new model only going on sale in April. Honda’s Insight hybrid ranked eighth.
One problem is that Toyota kept the price of the new Prius down to compete with the smaller, less luxurious Honda Insight hybrid that was introduced two months earlier. Another is that the fashionable Prius is gnawing into sales of more expensive and profitable Toyota models, such as the Toyota Crown and MarkX sedans. For instance, while Prius sales increased 186% to 208,876 in 2009, sales of the Crown, a more expensive luxury model, fell 46% to 40,216, according to the Japan Automobile Dealers Association.
That could have quite a big impact as Toyota battles to avoid a second consecutive annual loss for the first time in its history. Koji Endo, managing director of advanced Research Japan in Tokyo, reckons that Toyota earns about $2,100 in operating profit on the sale of one Prius compared to $10,700 on a Crown and $21,400 on a Lexus LS sedan sold in Japan. (Toyota doesn’t comment on the profitability of models.)
BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.