Sunday, January 18, 1998

Toyota decides not to sell Prius in U.S. this year

By Ted Evanoff / Knight-Ridder Newspapers

DETROIT -- Toyota Motor Corp. won't sell the environmentally friendly Prius sedan in the United States this year after all.

When the automaker showed off its 66-m.p.g. wonder car in Japan last October, Toyota President Hiroshi Okuda said the Prius could be sold in the United States in six months.

Toyota executives in California now say the Prius will come to the United States only in small numbers and mainly as a pilot for road testing.

In about two years, a new model developed for American driving styles will reach the United States and cost less to make than the current Prius, which is heavily subsidized by Toyota to encourage sales in Japan.

"We believe the cost will come down before we bring it to this market," said J. Davis Illingworth, general manager of Toyota Motor Sales U.S.A. of Torrance, Calif., the automaker's national sales and marketing arm.

Toyota sells the Prius for $17,700 in Japan, though it costs at least twice that to make. Toyota accepts the loss as part of the cost of developing the technology.

Though it resembles a Toyota Corolla, the car's cost is driven up by a powerplant that includes a big rack of batteries, electronic controls, an electric motor and a small gasoline engine. Because it uses an electric motor and a gas engine, the car is called a hybrid.

If nothing else, the decision to keep the Prius out of U.S. showrooms for a couple of years gives Detroit's Big Three automakers a little more breathing room as they develop their own environmentally green machines.

Every major auto company in the world is working on technology similar to the Prius.

But Toyota honed an image as a technical leader last fall when it touted the Prius, which emits half the carbon dioxide of a regular 1.5-liter gasoline engine, as the world's first hybrid car to reach market, in Japan.

Detroit's Big Three automakers were so chagrined by Toyota and the other Japanese automakers that the Detroit companies made it a point to emphasize green technology at the North American International Auto Show, which opened Jan. 4 in Detroit.

General Motors Corp. Chairman Jack Smith even asserted GM would have a hybrid car ready for market by 2001 and a car powered by a fuel cell, an exotic technology whose only exhaust is water vapor, by 2004.

GM engineers chortled their hybrid, unlike the Prius, would offer more power and performance. In developing this new generation of vehicles, however, the Big Three face the same problem as Toyota with the Prius.

Engineers know how to make a hybrid, but not how to make it affordable for the typical family. They're still looking for innovative ways to cut production costs.

And with the U.S. version of the Prius, Toyota is actually rebuilding its hybrid.

Because the Prius was made for urban Japan's stop-and-go driving, the U.S. model will most likely be completely different, said Jim Olson, senior vice president of Toyota Motor Sales in Torrance.

Building for the United States, he said, requires a bigger air conditioner and, in deference to the long freeway commutes, a bigger transmission and engine than the Prius. A 1.8-liter engine is possible, which won't get the high fuel mileage of the Japanese hybrid, he said.

"We probably won't have anything on the market until calendar year 2000," Olson said.