Demand Drives Up Price for Prius Hybrid August 2004

Citing the costs for increased production of its popular Prius Hybrid, Toyota said yesterday it would raise the price of the five-seat, gasoline-electric car by $580 in the United States.
The 2.9 percent increase, effective Sept. 14, follows a $300 price increase in April. Most buyers have to wait months for delivery of the popular Prius.

The hybrid car uses a sophisticated electric drive system to augment its gasoline engine and can actually run in all-electric mode for short periods at low speeds. The Environmental Protection Agency rates Prius fuel economy at 60 miles per gallon in city use and 51 mpg on the highway, although in real-world use the car averages 40 to 50 mpg.

With U.S. gasoline prices hovering around $2 per gallon, demand for fuel-efficient hybrids has increased. The only other hybrids sold in the United States are the two-seat Insight from Honda and the five-seat Honda Civic Hybrid sedan. But Ford is about to introduce a hybrid SUV, and other hybrid models are due in the next year.

As Prius waiting lists have grown, officials at Torrance, Calif.-based Toyota Motor Sales USA have been pressuring the parent company for more production. The Prius cars are made in Japan.

This month Toyota said it would increase worldwide production by 50 percent, to 180,000 vehicles a year, by establishing a Prius assembly line in a second Japanese factory. Toyota has not said how much of that additional product would be shipped to the United States.

Prius sales in the United States have almost tripled through July, to 27,013 from 10,522 for the first seven months of 2003.

The base price of the Prius has remained at just more than $20,000 for several years in the United States. After Sept. 14, the base price for 2005 models will be $21,390, including Toyota's standard $515 delivery charge. Options, including a navigation system, can add $5,000 to the purchase price. And some dealers are tacking on stiff premiums of $5,000 or more because the cars are hard to come by.

But Toyota insists that meeting demand, not taking advantage of it, is behind the latest price hike.

"The investment in new production capacity is the key reason," said spokesman John Hanson.

An estimated 11,000 customers who were on dealerships' Prius waiting lists before March 10 would be eligible to receive a $700 discount if they bought an '05 model. They would get a $300 discount if they purchased a new 2004 model, Hanson said.

SOURCE: Seattle Times

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