Toyota Trying Out a More Affordable Prius

In an attempt to capitalize on its standing as the United States’ biggest seller of hybrid cars, Toyota Motor Corp. (NYSE:TM) will soon unveil a smaller, less expensive version of its popular Prius.

Toyota hopes to broaden the market for hybrids, and thus spur demand, something its rival, Honda Motor Co. (NYSE:HMC), failed to do with its own low-priced hybrid, the Insight.

The new subcompact Prius c will go on sale in March, and according to Bob Carter, the company’s vice president of U.S. sales, Toyota hopes to sell about 40,000 units this year, double what the low-priced Insight did at its best.

“It’s going to appeal to a younger buyer at a price that’s more affordable,” said Carter.

After losing ground in recent years, Asia’s largest automaker hopes to boost U.S. sales by 15 percent to around 1.9 million in 2012. The company also wants to increase its global deliveries to 9.58 million units.

Increased sales of all Prius models, as well as Camry sedans and Lexus luxury models are expected to boost overall sales in the U.S. Toyota hopes to sell around 220,000 Prius models this year alone.

The Prius line currently has three models besides the Prius c: the basic Prius sedan, the Prius v wagon, and a Prius hatchback. The latter is able to go 15 miles entirely on battery power before functioning as a conventional hybrid.

Jessica Caldwell of Edmunds feels that reaching the 40,000 sales goal will be a challenge for the manufacturer, but the economics of 50 miles per gallon in the city may be a powerful selling point.

The Prius c will be priced under $20,000, at about $18,950. More advanced models, featuring better navigation, audio system, and other goodies, are tiered at $21,635 and $23,230.

The Prius c will be 19 inches shorter and more than a quarter of a ton lighter that the basic Prius, which itself starts at around $24,000 before rising to just under $30,000.

The small five-door hatchback is expected to get 46 mpg on the highway and 53 in the city, for an average of 50 mpg. By point of comparison, the Honda Insight gets 42 mpg and sells at around $18,350.

The one caveat that may stand in the way of Toyota’s sales goals may be gas prices. Hybrid sales are very dependent upon gas prices — when prices are high, sales are up, and if they’re low, sales tend to decline.

Honda’s Insight had the misfortune of being released in 2009, when gas prices took a sharp tumble downward. Honda had expected to sell 90,000 Insights in the United States annually, but at its height in 2010, it sold just under 21,000.

But gas prices so far this year are in Toyota’s favor, and may continue to climb higher. And one shouldn’t discount the fact that the Prius has already established a reputation in the U.S., where it is presently the best-performing hybrid in terms of sales.

To contact the reporter on this story: Jonathan Morris at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com