Toyota Boosting Prius Production To Align Supply to Strong Demand

By John O'Dell May 29, 2009

Thumbnail image for 2010prius copy.jpg Toyota Motor Corp., taken aback by the volume of advance orders in Japan for the 2010 Prius, had been considering cutting down initial shipments to the U.S, where the redesigned hybrid is scheduled to go on sale within days.

That plan was jettisoned, though, and Toyota now is increasing production at its two Prius plants instead.

"We don't want the North American market to be hurt," said John Hanson, head of environmental communications for Toyota Motor Sales U.S.A.  "We're upping production to protect allocations" for the U.S. and Europe while still satisfying home market demand.

Toyota, which launched the third-generation Prius in Japan earlier this month, had expected to sell 100,000 of the fuel-efficient hybrids there by December. Instead, its dealers took advance orders for 80,000 and have reportedly sold another 20,000 in the two weeks since the launch. That's 100,000 down with six months still to go.

The company is now pushing to increase annual Prius production to 500,000 cars -- up from 400,000 -- to keep adequate supplies flowing to all markets.

It reportedly is increasing operating hours at its Prius plants in Fujimatsu and Tsutsumi in Japan to boost production.

But plans for a Prius plant in Mississippi, put on hold last year as the economy worsened and Toyota began looking for ways to cut expenses, aren't likely to be reactivated this year even with the increased demand, Hanson said.

Conspiracy theory -- and just because you're paranoid doesn't mean they're not out to get you -- suggests that it is in Toyota's best interests to keep production lower than demand.

Indeed, a slight waiting list never hurts -- among other things there's rarely a need to place profit-trimming incentives on vehicles in short supply.

But Toyota's in a quandary because the Prius faces some real competition from Honda's lower priced Insight hybrid. A supply-demand imbalance that keeps prospective customers waiting too long (and the wait for delivery of a new Prius is four months in Japan) could drive some into Honda's arms.

We hate writing about dealers who gouge customers by jacking up the price of hard-to-find vehicles, so we add our voice to those of prospective Prius buyers who are hoping the company gets its supply chain properly tuned and can ship the U.S. all the Priuses its dealers need.

Stay tuned.

John O'Dell, Senior Editor

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blackadder5639 says: 9:07 AM, 06.01.09

"But Toyota's in a quandary because the Prius faces some real competition from Honda's lower priced Insight hybrid."

Really? I see them as different cars: the Prius is almost large enough (and now, about powerful enough) to be a useful family car. It also gets better fuel economy.
The Insight is like a compact, maybe a sub-compact.

IMO the Insight is not really a Prius competitor!


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