Toyota Motor Corp.’s Prius hybrid became Japan’s top-selling automobile last year for the first time since its debut in 1997 as government incentives spurred demand for fuel-efficient vehicles.
Prius sales almost tripled to 208,876 in 2009 from a year earlier, according to the Japan Automobile Dealers Association. The model outpaced Suzuki Motor Corp.’s WagonR minicar, which had been the top-selling model for five consecutive years, and Honda Motor Co.’s Fit compact.
Government stimulus introduced last year saves buyers as much as 394,500 yen ($4,229) on the cheapest Prius, priced at 2.05 million yen. The model may not retain its No. 1 spot after the support ends on Sept. 30, said Yoshiaki Kawano, an analyst at auto consulting company CSM Worldwide in Tokyo.
“The Prius was one of the models that benefited the most,” Kawano said. “Sales will certainly drop from October.”
Government aid helped Japan’s vehicle sales rise for five consecutive months through December.
“The government’s tax cuts and subsidies provided a tailwind” for Prius sales, Toyota’s Executive Vice President Yoichiro Ichimaru said in an interview on Jan. 5.
Hiroyoshi Ogawa, who runs a Yokohama computer-systems company, bought a Prius for his business in May to replace his Avensis sedan.
‘Government Aid’
“We can get government aid to buy the car and on top of that, as we drive it, our company image benefits from being seen as eco-friendly,” Ogawa, 54, said.
Toyota shares rose 2.9 percent to close at 3,960 yen on the Tokyo Stock Exchange. The Nikkei 225 Stock Average added 1.1 percent.
The third-generation Prius, priced between 2.05 million yen and 3.27 million yen, is 7 percent more fuel efficient than the previous version, with a fuel economy of 38 kilometers per liter (89 miles per gallon), according to testing rules established by the Japanese government.
Rival Honda’s Insight hybrid, which was introduced in February, gets about 30 kilometers per liter. The new Prius has a fuel efficiency of 51 miles per gallon in city driving, according to U.S. Environmental Protection Agency data.
Many Japanese buyers have replaced bigger, luxury cars such as Mark X and Crown sedans for the Prius, said Hiromi Inoue, a sales manager at Tokyo Toyopet, Japan’s biggest seller of Toyota hybrids.
Hybrid ‘Pride’
“With the hybrid, they don’t have to throw away their pride even though the size is smaller,” he said.
Toyota earns about 200,000 yen in operating profit on the sale of one Prius compared with about 1 million yen on a Crown sedan and 2 million yen on a Lexus LS sedan, said Koji Endo, managing director of advanced Research Japan in Tokyo. Toyota spokesman Takanori Yokoi declined to say how much profit the Prius generates.
Toyota has probably spent more than 1 trillion yen developing the hybrid since the project began in the 1990s, said Mamoru Kato, an analyst at Tokai Tokyo Research Center in Nagoya, Japan. The company only began making profit on the current model, the Prius’s third generation, he said.
Operating Profit
“The increase of Prius sales at the cost of other models is negative” for the company, Endo said. “Toyota will face a decline in operating profit.”
Price competition from hybrid-making rivals has also made it more difficult for Toyota to capitalize on the model’s success.
When Toyota started taking orders for the third-generation Prius in April, President Akio Toyoda slashed the price of the entry-level Prius by 12 percent to 2.05 million yen. The cut was needed to compete with Honda’s redesigned Insight Hybrid, priced from 1.89 million yen.
Toyota aims to sell 1 million hybrids a year between 2010 and 2020 and offer hybrid versions of all its models in the decade from 2020 to 2030, according to the company.
Other carmakers including Nissan Motor Co., Japan’s third- largest carmaker, are also introducing fuel-efficient vehicles, potentially making Toyota’s Prius less appealing. Honda plans to introduce two more hybrids this year.
Japan’s auto sales excluding minicars rose 37 percent last month, the fifth straight increase after recovering from a yearlong slide in August. The nation’s 2009 auto sales dropped 9.1 percent, the sixth straight decline.
