New Camry Seen as a Test for Broader Hybrid Demand
COMPANY BANKING ON HYBRIDS
By Joe Guy Collier
Detroit Free Press
Looking to extend its lead in the U.S. hybrid market and test demand for the technology on a broader scale, Toyota Motor has started producing its Camry hybrid at the company's Georgetown, Ky., plant.
The Toyota Prius, a funky-looking fuel-efficient car that comes only as a hybrid, has become a signature vehicle in the green-car movement.
But the Camry, the best-selling car in the United States at more than 400,000 vehicles a year, could be a better measure of just how far hybrids can spread to the masses.
With the Camry, Toyota is banking on hybrids becoming a requested feature for the typical customer, not just an oddity for someone looking to make a statement.
``It definitely expands the pool of consideration,'' said Dave Hermance, executive engineer for advanced technology vehicles for Toyota in North America. ``The thought with Camry is that it moves the vehicle to the mainstream where it now becomes a powertrain option.''
As gas prices hovered around $3 a gallon last summer, gas-electric hybrids, which use a combination of gas and electric power to improve fuel efficiency, became a hot topic in the auto industry.
Compared with the overall market, hybrid sales still are small. Automakers are on track this year to sell about 266,000 hybrids in the United States for about 1.6 percent of the overall market, according to J.D. Power and Associates. By 2013, J.D. Power estimates that number to grow to 900,000 hybrids, or 5 percent of the overall market.
The Camry hybrid is significant because it could attract a new type of buyer, industry experts say.
The Toyota Prius, accounting for more than 40 percent of all hybrid U.S. sales so far this year, is easily the top player in the segment.
But the Prius caters largely to consumers motivated by their concern for the environment, said Anthony Pratt, J.D. Power senior manager for global power train forecasting.
``If it's important for you as a hybrid owner to be recognized as a hybrid owner, the Prius is a logical choice,'' Pratt said. ``Right away someone will know.''
The Camry could take hybrids in a different direction, even though Toyota expects traditional, non-hybrids to continue to account for 90 percent of Camry sales.
``If you look at the average Camry buyer, they're not buying it to make a statement,'' Pratt said. ``They're looking for dependability, reliability, resale value. . . . The Camry hybrid may be the average man's hybrid.''
Market demand
The Camry hybrid, which Toyota began shipping to the United States from a Japanese plant this past spring, already is on track to be the second-best-selling hybrid this year, behind only the Prius.
Production began shifting this month to the Kentucky plant that makes most of the Camrys sold in North America. The move should give Toyota greater flexibility to meet market demand.
Consistent with the Camry's practical appeal, Toyota appears to be offering customers a strong value proposition, said David Friedman, clean vehicles research director for the Union of Concerned Scientists in Washington, D.C.
The base price for the Camry hybrid is $25,900, putting it $1,200 above the top trim level for a standard four-cylinder Camry but still $1,920 below the top trim level for the V-6 Camry. The Camry hybrid gets an estimated 40 mpg city/38 mpg highway, which averages out to be a 37 percent improvement over the standard four-cylinder Camry.
If gas prices stay around $2.50 a gallon, the Camry hybrid would pay for itself in five or six years, Friedman said. With the Prius and the Camry hybrid combined, Toyota is fast branding itself as the hybrid automaker, he said.
``I think the Camry is a big step,'' Friedman said. ``It means a new choice for your classic family car. For Toyota, they're positioning themselves where they are thought of as the hybrid company.''
Besides the Camry and the Prius, Toyota also sells a hybrid version of its Highlander sport-utility vehicle. Its upscale Lexus brand sells the GS 450h sedan and the RX 400h SUV hybrids.
Toyota, though, will not be alone with new products in the hybrid market. Honda, second in the United States in hybrid sales, offers a Civic and Accord hybrid. (It recently stopped selling its two-seat Insight hybrid.) It also has announced plans to bring a new affordable hybrid-only vehicle, priced below the Civic hybrid, to North America by 2009.
Ford Motor, the leader among the domestic automakers, has backed off a pledge to make 250,000 hybrids a year by 2010, saying a range of technologies is needed to meet consumer demands. But Ford continues to broaden its hybrid portfolio. Already selling the Escape and Mariner SUV hybrids, Ford plans to add the Mazda Tribute SUV hybrid this year and Fusion and Mercury Milan hybrid sedans next year.
Other automakers
Earlier this year, General Motors started selling a Saturn Vue Green Line often described by experts as a mild or hollow hybrid because it uses a low-voltage battery that provides only modest fuel savings. And Nissan recently unveiled its Altima hybrid, a vehicle that goes on sale early next year.
GM, DaimlerChrysler and BMW, working jointly on a hybrid project, will release their first full-fledged hybrids in late 2007 and early 2008.
The hybrid market is far from set, Friedman said. No automaker is out of the game.
``They've all got smart engineers,'' he said. ``But what Toyota is clearly winning is the image race.''
Toyota's Hermance said his company plans to continue pushing the technology further. Toyota will not disclose the cost of adding hybrid technology, but he said it has reduced the cost by half already and hopes to halve costs again by early next decade. By that time, Toyota expects to sell 1 million hybrids globally each year, 600,000 of them in the United States.
Demand for hybrids in the short term may go up and down depending on gas prices, Hermance said. But Toyota has faith that the drive for more fuel-efficient cars and trucks is a long-term trend.
``Long term, we're going to run out of dead dinosaurs,'' Hermance said. ``It's best to conserve them when we can.''
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