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Japan's Top Selling Car Is A Hybrid: Toyota Prius

YURI KAGEYAMA   01/ 8/10 11:04 AM ET   AP

Japan Toyota Prius

TOKYO — The Toyota Prius is so sought after in Japan it is the first gasoline-electric hybrid vehicle to top annual sales, with buyers willing to wait six months for deliveries of the curvaceous "green" car

The Prius has caught on in the U.S. and other parts of the world as well, although not with quite the same passionate intensity as it has in Japan, Toyota Motor Corp.'s home market.

Its success underlines the shift among consumers to embrace green auto technology that appears to go beyond a simple moneysaving response to the ups and downs of gasoline prices.

But Toyota can also expect competition to heat up this year, with rivals readying fuel-efficient models, including the Chevrolet Volt electric vehicle from Detroit-based General Motors Co.

The Japan Automobile Dealers Association said Friday that Toyota Motor Corp.'s Prius was No. 1 in its ranking of sales by vehicle models – with 208,876 Prius cars sold in 2009, nearly three times the numbers sold the previous year.

Ritsuko Murosaki is one proud owner.

"I was a bit worried about its power but once I got used to it, it is so quiet and it drives great," said the 45-year-old secretary who drives to work in central Tokyo from the suburb of Yokohama. "When you stop at a traffic light, you can experience zero CO2 emissions because there's no idling."

Globally, Prius sales last year rose 41 percent to about 404,000 vehicles from the previous year, according to Toyota. Prius sales in North America fell 12 percent to 144,300 last year, but that was amid a big overall auto slump, and sales are expected to recover this year.

In Japan, the Prius easily outsold the No. 2 hybrid, the Honda Insight, at 93,283 for the year, and ranking fifth in overall Japan sales. Coming in second for overall car sales was Honda Motor Co.'s Fit, followed by the Toyota Vitz. Neither are hybrids but both are small and fuel efficient models.

Green models have gotten a huge lift this year in Japan from a government cash-for-clunkers program and tax breaks, aimed at boosting sales during a slowdown that has seriously hurt Japanese automakers.

The Prius has been the biggest beneficiary of the policy.

Hybrid sales got a perk from the cash-for-clunkers program in the U.S., but that only lasted about a month. The program in Japan is being extended by a half-year through September.

"The Prius is just the talk of the town," said Hiroyuki Naito, a Tokyo Toyota dealer, who could barely control his glee over a fresh flurry of orders after the incentives were extended. "The model appeals to a wide range of people. Some are switching from import models, while others are switching from luxury models."

Hybrid sales already make up about 10 percent of new vehicle sales in Japan. Green Car Congress, which researches and compiles reports on green technology, said hybrids had a 2.8 percent share of new vehicle sales in the U.S. last year.

"The Prius is proving to be the solitary runaway winner," said Mamoru Katou, auto analyst with Tokai Tokyo Research.

A model that sells 20,000 a month in Japan is rare, said Katou, adding that he expects the Prius to sell in even bigger numbers in 2010 in Japan.

Pricing has been a big reason for its success, according to Katou. That value-for-the money perception is unlikely to be threatened until the arrival of Honda's hybrid Fit in Japan expected later this year, he said.

Honda has not yet disclosed overseas sales plans for the hybrid Fit.

In an effort to ride out the competition of rivals, especially the Insight, Toyota has kept prices down on the Prius – starting at $22,000, unchanged from the base price for the 2009 model, and a more basic U.S. model starting at $21,000. In Japan, the Prius starts at 2.05 million yen, or about $22,000.

Over the longer term, automakers are planning green models for markets like China and India, attracted by the prospect of burgeoning middle classes in these emerging economic superpowers.

Toyota already makes the Prius in China, the only other nation besides Japan where it manufactures the Prius. And earlier this week, it announced it will start selling the Prius in India this year.

The Prius was the top-selling model in Japan for every month from May last year – the month when an upgraded version hit showrooms.

The Prius, now in its third generation since its 1997 introduction, is the best-selling gas-electric hybrid in the world, racking up a cumulative 1.6 million units sold so far, according to Toyota.

Hybrids, by going back and forth between a gasoline engine and electric motor, tend to offer better mileage in slow-speed and stop-and-go driving that's common in crowded cities.

The new Prius gets a combined 50 miles per gallon, compared with 46 mpg for the 2009 model, according to Toyota. It does even better under Japanese government testing standards, at 38 kilometers per liter, which converts to 90 miles per gallon.

Japan's auto market has been stagnant for decades, and the perk from hybrid sales is a rare bright spot. Auto sales in Japan declined to their lowest level in 38 years last year, slipping 9 percent to 2.9 million vehicles.

Toyota has been hammered by the global slump, and reported a 437 billion yen loss, its worst ever in its seven-decade history, for the fiscal year ended March 31, 2009. It expects to stay in the red for the fiscal year through March 2010, projecting a 200 billion yen ($2.2 billion) loss, but wants to avoid three straight years of losses.

And so the Prius success is a godsend.

"The numbers speak for themselves," said Toyota spokesman Paul Nolasco in Tokyo. "The Prius represents the ideal package people in Japan are looking for in terms of environmental and driving performance."

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Filed by Adam J. Rose  |