Toyota lowers sales target for Prius as hybrids lose steam
The new Toyota Prius went on sale in its homeland last Wednesday, but the company has already lowered its global sales target as low fuel prices dampen demand for hybrid cars. Toyota adjusted its target to 300,000-350,000 units from the 300,000-400,000 units targeted for the previous model.
Oil prices have nearly halved since mid-2014, lowering prices at the pump and encouraging drivers to buy gas-guzzling SUVs and pickups rather than fuel-efficient vehicles. In the US of A, sales of the Prius from January to November 2015 dropped 12% year-on-year. The fourth generation Prius costs about 19% more than its predecessor, starting at ¥2.43 million (US$19,800), a fact that probably contributed to weaker forecast sales. However, with the higher price tag comes improvement in fuel efficiency and reduced CO2 emissions. Toyota is targeting a 20% improvement, compared with the outgoing model, under European emissions standards.
Not that that matters to most car owners. Sales of SUVs and pickups in the USA have increased by 10% this year, which is almost double overall vehicle sales. The Prius will still do well in Japan, considering the country’s biased tax system which encourages purchase of hybrids, but Japan is but a small fraction of the global market. The best-selling hybrid will take on North America and Asia next month, and Europe the following month. If the Prius can’t make it there, no other hybrids can – of the 9 million hybrid cars on the road, about 4 million of them are Prius models.
Is this the end for hybrids?
Sales of hybrid vehicles have been falling since 2013, with a 9% decline in 2014 and an even worse 16% drop in the first half of 2015. Consumer trend has shown that it is not so much concern for the environment that would encourage them to adopt fuel-efficient cars, but how much money they can save. With prices at the pump hovering around only US$2 per gallon, consumers showed that they would rather drive a Ford Explorer than a Toyota Prius.
While sales of hybrids had been falling, sales of SUV’s have been increasing since 2014 and is expected to conquer 40% of the market by as soon as 2020. Let’s not forget also the increasingly strong competition offered by all-electric vehicles, led by Tesla which has supplanted the Prius as the coolest, celebrity-favoured, environmentally friendly vehicle available.