| TOYOTA CITY, Japan
TOYOTA CITY, Japan Toyota Motor Corp. (7203.T)
expects to cut costs for hybrid cars enough to be able to make
as much money on them as it does on conventional gasoline cars
by around 2010, a top executive said on Thursday.
Japan's top automaker has been keen to see the fuel-saving
powertrain enter the mainstream since launching the Prius, the
world's first hybrid car, in 1997, but sales have come at the
expense of profitability given their high production costs.
But Masatami Takimoto, executive vice president in charge
of powertrain development, said cost-cutting efforts on the
system's motor, battery and inverter were bearing fruit, and
the cost structure would improve drastically by the time Toyota
reaches its sales goal of one million hybrids annually in 2010
or soon after.
"By then, we expect margins to be equal to gasoline cars,"
he told Reuters in an interview at Toyota's headquarters in
Toyota City, central Japan.
If it succeeds, Toyota would be removing the main hurdle
preventing rivals from pushing the expensive powertrain, which
twins a conventional engine with an electric motor, and likely
widen its sales lead as more consumers seek better mileage amid
rising fuel costs.
Data this week showed U.S. gasoline prices at an all-time
high above $3 a gallon, and Takimoto said he expected energy
prices to continue rising.
Toyota likely achieved cumulative hybrid sales of one
million units this month, having moved 998,900 by the end of
In 2006, it sold 313,000 units, accounting for the majority
of the world's hybrid cars, and aims to lift that to 430,000
units this year with ramped-up production of the popular Prius.
With endorsement from Hollywood stars such as George
Clooney, Toyota struggled for years to keep up with demand for
the second-generation Prius. But sales began to suffer late
last year after U.S. tax credits whittled down for the model,
prompting Toyota to offer incentives of up to $2,000 on each
Pundits said that was pressuring already-tough margins on
the hybrid. But Takimoto said he saw little impact on
profitability before and after the incentives appeared, mainly
thanks to larger volumes -- Prius production will rise by 40
percent to 280,000 units this year -- and the ongoing efforts
to shave costs.
"There really hasn't been that much of a difference in
margins," he said, adding: "In a sense, you could say things
are finally normalizing now. The Prius will soon enter its
fifth year, and all this time we had no incentives on it."
Industry watchers expect the current Prius to be remodeled
late next year or in early 2009, using a lithium-ion battery
for the first time. Takimoto declined to confirm the
speculation, but added that Toyota's lithium-ion battery, under
development with Matsushita Electric Industrial Co. (6752.T),
was technically ready to be mounted on hybrid cars "any time."
(Additional reporting by Noriyuki Hirata)