Toyota’s hybrid strategy a bright spot in a down year

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Toyota Motor North America’s electrification strategy in the U.S. isn’t sexy or even that complicated — but it does appear to be working.

The Japanese automaker’s massive bet on hybrids — it plans to offer electrified versions of all the vehicles in its U.S. lineup by 2025, while other automakers have concentrated on battery-electric vehicles — has translated into a big boost in hybrid sales across much of its lineup, top Toyota Motor North America executives said. The boost comes even as Toyota marked its fourth consecutive year of declining sales in 2019, when Toyota brand sales were down 2 percent and Lexus sales slipped 0.1 percent.

Hybrid sales, including the Prius Prime plug-in hybrid, across the Toyota brand rose 26 percent in 2019 to 230,889, while Lexus’ hybrid sales jumped 43 percent to 43,661 last year.

Toyota believes more consumers will be willing to choose more-expensive optional hybrid powertrains in coming years, especially when stacked against the coming onslaught of range-limited battery-electric alternatives.

“2020 will be like the space race for hybrid and electric leadership in the automotive industry,” Jack Hollis, general manager of the Toyota brand, said during the company’s sales conference call this month. “We started 2019 with a 5 percent hybrid mix, and looking now at December, we are now over 13 percent. Our hybrid sales are up 26 percent year over year, and we’re not stopping there.”

Hollis said Toyota expects hybrids to make up at least 15 percent of its sales in 2020. In 2019, Toyota launched or refreshed hybrid versions of the Corolla and RAV4 and added an optional all-wheel-drive version of the Prius. A redesigned Highlander hybrid is set to arrive in dealerships in the first quarter of 2020.

Toyota’s original hybrid, the Prius, did not fare well in 2019, despite the introduction of the awd version to help sales in cold-weather states. Prius sales were down more than 20 percent in 2019 to 69,718 — the lowest annual total since Toyota dealers sold 53,991 copies of the hybrid in 2004.

Like the Prius, sales of the hybrid version of the Avalon sedan were down 18 percent year over year.

A year ago, Toyota executives admitted that falling Prius sales were a result, in part, of Prius owners moving toward full-electric vehicles such as the Tesla Model 3. Toyota has attempted to convince consumers that modern hybrids can be sporty and fun to drive and is making inroads on the messaging, Hollis said.

“We’re doing our part to educate our guests and dealers about the incredible benefits hybrid and electrification ownership can bring, because our hybrid vehicles today are a completely different breed,” Hollis said. “They’re some of the quickest and most powerful vehicles we have in our lineup, and they’re only getting better.”The redesigned RAV4 hybrid accounted for 44,401 of the added 48,038 hybrids the Toyota brand sold in the U.S. during 2019 and helped push overall sales of the industry’s top-selling crossover up 4.9 percent for the year to 448,071. In 2019, one of every five RAV4s sold in the United States was a hybrid, nearly double the take rate from 2018.

Meanwhile, Lexus’ hybrid sales also rose sharply in 2019, up 43 percent to 43,661 vehicles, or about one in every seven Lexus vehicles sold in 2019.

“Our hybrid portfolio ran the show [in 2019],” said David Christ, group manager of the U.S. Lexus division.

Much of the added hybrid sales volume for the luxury brand came with the addition of the hybrid UX crossover in 2019. That helped sales of hybrid Lexus crossovers nearly double since 2017, Christ said, “which is a direct reflection of the investment we’ve made in the Lexus electrified strategy.”

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