Toyota's Hybrid Challenge

The World's Largest Automaker Looks to New Technology and fuel Efficiency to Win Back Buyers

by Pallav Regmi, age 17

The Toyota Prius was one of the first hybrid cars to gain popularity in the United States. Introduced worldwide in 2001, its sleek design and above average mileage attracted many buyers. Even its critics praised the innovation of a combination of petrol and electric, full hybrid vehicle. Toyota made its mark among the public by introducing the Prius into the global market.
Recently, Toyota unveiled another line of Prius at the North American International Auto Show in Detroit. The new FT-CH hybrid is described as being 22 inches shorter than earlier models of Prius, using less gas, and potentially having a much cheaper price tag than the current Prius, which starts at $22,000.

In introducing the new vehicle, Toyota hopes to appeal to younger, less affluent customers. “There’s room for a more affordable hybrid suited for younger buyers,” said Yoshimi Inaba, the president of Toyota North America.
However, the new Prius has many competitors. Recent safety concerns also spell trouble for the Toyota brand. Jessica Caldwell, the director of pricing and industry analysis at says, “Their hold on the hybrid market is slipping away. If it doesn’t come out soon, I can see them losing their grip on it fast.”

A survey conducted by Roger Kempa, a Master of Business Administration (MBA) student, supports Caldwell’s statement. The survey discovered that the new generation no longer viewed Prius and hybrid together. Kempa said, “… the word hybrid has been separated from Prius.” The survey also found that new generation buyers were “willing to pay about $1000 more for a vehicle with a hybrid-only brand.”
 Of course Toyota currently faces other issues that might discourage consumers from buying Toyota-made vehicles.  Toyota announced recently that it would recall about 3 million of its vehicles. The recall is linked to 19 deaths related to sticking gas pedals and failed braking systems. New reports show that consumers think Toyota was slow to respond to a critical problem. "I would give Toyota an 'F' in my class for their corporate responsibility program," says Dartmouth professor Paul Argenti, who teaches at the Tuck School of Business.
Meanwhile, the company plans to introduce eight new hybrid models in the near future. Toyota also plans to produce and sell electric hybrid vehicles as soon as 2012 and hydrogen-fuel-cell based electric vehicles in 2015. Many industry experts say that to make their marketing effective, Toyota must take greater responsibility over the concerns and complaints of its consumers and critics.

[Source: USA Today; Newsweek;;;;;]