Hybrids: Success of innovative foreign vehicles proves a bitter pill for American automakers.
By Larry Williams
April 17, 2005
If GM’s problems make you think America’s love affair with cars may over, you should stop by Russell Toyota on Route 40 West in Baltimore and have a chat with Andy Seidenman, the sales manager.
Seidenman’s problem is finding cars, not customers. Like other Toyota dealers across the nation, he has trouble keeping the Prius, Toyota’s hybrid-engine car, on his showroom floor.
The widely praised Prius, which promises 51 miles to the gallon on the highway at a time when gasoline is retailing for between $2.20 and $2.30 a gallon, has become wildly popular.
"People love this car," said Seidenman. "We could sell as many as we can get.
Seidenman generally gets just four or five Priuses a month. Customers who custom-order a Prius may wait anywhere from two to four weeks for delivery. In some areas of the country, the wait has stretched as long as three months.
In the 2000 model year, when Toyota introduced the Prius, the company sold 5,562 of the cars. Almost 54,000 were sold in the 2004 model year, and the company expects to sell 100,000 this year, said Xavier Dominicis, the company’s national manager of media relations, in a telephone interview last week.
For Toyota, the success of the Prius is the centerpiece of what promises to be a spectacularly successful year. Toyota posted its best-ever first quarter in 48 years of business in the United States with sales of 507,236 vehicles, up 10.6 percent from the same period last year.
That success is a bitter pill for American automakers. The only American hybrid available is the Ford Escape, which uses technology licensed from Toyota.
American automakers aren’t falling short because of a lack of vision.
In 1993, the Clinton Administration created the Partnership for a New Generation of Vehicles – a cooperative research and development partnership aimed at creating a prototype "super-efficient" car.
The program brought together the Big Three automakers, DaimlerChrysler, Ford and General Motors, with federal agencies and several government defense, energy and weapons laboratories.
Over the next several years, the government spent more than $1 billion on the project with the ultimate aim of producing a prototype vehicle that would achieve approximately 80 miles per gallon by 2004. But by the turn of the century the program was running out of gas.
While the government-funded researchers searched for fuel efficiency, U.S. carmakers concentrated on selling gas-guzzling SUVs and vans. The American public appeared indifferent to their poor fuel efficiency, and the vehicles, built on already engineered light-truck frames, produced high profit margins.
Now, the car makers are paying for their indifference.
Toyota is preparing to introduce the Lexus RX 400, a hybrid luxury SUV, and Dominicis says the company will bring out a hybrid version of its mid-priced Highlander SUV in June.
Honda has three hybrids on the market here – a subcompact called the Impact, and hybrid adaptations of its popular Civic and Accord.
Last year, the Prius captured 63 percent of the U.S. market for hybrid cars, among seven available models, according to J.D. Power & Associates. But Honda is sharing in the gravy. U.S. sales of hybrid cars doubled last year, according to J.D. Power & Associates, to 85,699 cars.
Meanwhile, the first American hybrids aren’t expected until next year at the earliest.
Bob Lutz, who stepped down two weeks ago as GM’s North American chairman as part of the shakeup that accompanied the announcement by GM Chairman G. Richard "Rick" Wagoner Jr. that the company expected to lose $850 million in the first quarter, has confessed that GM blew it on the hybrids.
In a speech at the Denver Auto Show last week, Lutz was reported to have said GM had developed hybrid prototypes as early as 1986 but backed off because fuel was cheap and plentiful.
Now, Lutz acknowledges, a halo effect from the success of the Prius has given the entire Toyota line of vehicles an edge with American consumers.
Copyright 2005, Baltimore Sun