Toyota Losing Money on Prius?

[spwolf]

Actually Toyota has said officially last year that they are making money on Prius...

[DaveinOlyWA]

Originally Posted by malorn

Dave,

It does not matter if a Prius is sold @$5000 over msrp, msrp, invoice or $1000 under invoice unless toyota has dealer cash on it, toyota makes teh same $.

oic.. so the term "factory incentives" or "manufacturer's rebates" is actually the dealer taking a bath on the sale???

wow, that is news to me!! tell me more!!

[malorn]

Originally Posted by DaveinOlyWA

oic.. so the term "factory incentives" or "manufacturer's rebates" is actually the dealer taking a bath on the sale???

wow, that is news to me!! tell me more!!

No but i was under the impression the Prius sold without Incentives. Any incentives are subtracted from the revenue the sale generates the manufacturer.

[malorn]

Originally Posted by spwolf

Actually Toyota has said officially last year that they are making money on Prius...

Can you get me a source, because even Toytoa dealers I know think it is a loss to toyota's bottom line if goodwill is not accounted for.

[EZW1]

I thought of another angle:
One thing a company does when they market a product is to produce a business model and aim to make the profit margin they hope for. Until recently, Toyota has not been able to manufacture the number of Priuses they wanted because the battery supplier could not make quota. Well, that is behind them now. What if 'Toyota was losing money' was just another way of saying they weren't making the profit margin they planned (because of the battery production problem)?

[bwilson4web]

Originally Posted by malorn

That is certainly the thinking within the industry.

If "the industry" chooses to believe such nonsense, then the need for new management is even more dire than before. Those whom the Gods would destroy, first the Gods make insane.

Originally Posted by malorn

. . . Now if you include all of the goodwill that the Prius has garnered for Toyota and the ability to build bigger and heavier(and very profitable) vehicles while still maintaining a "green" image than it would certainly be looked at in a whole new light.

It also means Toyota decided to pick some of the 'low hanging fruit' that had sustained 'the industry.' Yet Toyota remains profitable, not as much, but still 'in the black.'

Originally Posted by malorn

How Bad is U.S. Auto Market? Toyota’s Losing Money, Too | Auto Industry Blog | BNET

I read the article and then took the link to read "Financial Summary, FY2009 Second Quarter, (April 1, 2008 through September 30, 2008)" and the financial statement shows no evidence of the loss claimed by Jim Henry. Seriously, don't go by a synopsis, read the source material.

Originally Posted by malorn

. . . toyota managed to lose money in NA without any legacy costs. Think about that for a moment.

I've toured the Toyota Georgetown KY plant three times. This is where they make the Camry Hybrid. This last time, October 13, I saw a VENZA that was being made there prior to the official release.

The Venza is a cross-over SUV, not something I was especially interested in since it isn't a hybrid. But it was being made on the same assembly lines as the Camry, Camry Hybrid, Solara, Avalon, and now the Venza. Then I saw the annoucement of a Cadillac, fuel-cell, plug-in "concept car" being shown at Las Vegas:

Some reports claim the Venza will be available as a hybrid in 2010 and the Cadillac "is not forsale" and isn't even at the LA Auto Show.

Now if Toyota solves their battery supply problem and comes out with a little beefier, more efficient hybrid drive, I could see:

Camry and Camry Hybrid (in production today)
Solara and Solara Hybrid (could be done today!)
Avalon and Avalon Hybrid (possible hybrid?)
Venza and Venza Hybrid (announced hybrid 2010)

That is the type of innovation needed and with Toyota's three year focus on cost savings, there is a good chance they can pull this off.

Remember, Toyota sold 180,000 Prius last year alone and a reasonable sampling of other models. Call them applied R&D but Toyota has over a decade of hybrids running 'in real life,' not PowerPoint engineering and 'concept cars.' They have been putting 10-20,000 of their higher powered hybrids out for real-life testing and learning the lessons of what works and doesn't work.

I just don't see 'the industry' innovation "wheels on the road" to have any confidence or respect except towards Ford. Ford has put another lady engineer in charge of their hybrid line and come out with a Camry Hybrid competitor. Meanwhile, their last hybrid lady engineer is building after-market hybrid kits for the Ford delivery trucks and selling them. So I have no problem with giving Ford the lion's share of a tax payer bailout.

As for the rest of 'the industry,' a Chapter 11 merger and spinning off their defense work makes a lot of sense. This will reduce the excess capacity of unsold inventory and maybe let them shake out the dead wood. But above all, tell the front office to 'pull their rip cords' and leave.

Bob Wilson

[hampdenwireless]

Originally Posted by spwolf

Actually Toyota has said officially last year that they are making money on Prius...

And I believe they were making money early in the life of the current generation PER UNIT. Think about it this way, they are taking many of the basics of a $13000 car and selling it for $23000+. They use most of the same engine parts and suspension from the last generation Scion Xb and Xa. Sure they add lots of content but most of it does not cost that much in the real world of manufacturing when you are making hundreds of thousands. The only real expensive part is the batteries. Electric motors and the PSD while precise are not expensive.

The R&D for the HSD has paid off for Toyota BIG TIME. They are the clear leader with only one other player (Ford) with a serious economy oriented full hybrid approach. And Ford just can't make the quantities needed and is loosing money on its program.

Honda, with its IMA is making money because its such a simple system and they can make it in the quantities needed but they are really playing on their engine technology and have never made a full hybrid.

[nyty-nyt]

The manager of the dealership that I got mine from recognized the fact that I have been an excellent customer over the past 18 years, and knocked 1500 off the price without my asking.
I would like to thank him and Toyota for the wonderful car, and for taking the loss to the benefit of me. I will remain loyal for a lifetime.
That's great marketing.

[bwilson4web]

So we are faced with this interesting quote:

. . .
Prius went on sale in the third quarter of 2000 and found 5562 buyers through year's end. Deliveries in the first nine months of 2001 were 10,616, nearly 60 percent of which came in the third quarter. That's remarkable in light of recent events, though understandable given widespread fears of gas shortages--and scattered attempted price-gouging--in the first weeks after September 11th.

Toyota officials recently told Bloomberg News that Prius is turning a small per-unit profit after some 75,000 worldwide sales as of late December 2001. Starting with 2002, the company will increase yearly Prius deliveries to the U.S. by about 40 percent to some 17,000 units. Even so, Toyota says sales will remain insufficient to offset research and development expenses, capital investment, and perhaps warranty costs. Bloomberg News also reports that by 2005, Toyota projects building up to 300,000 alternative-power vehicles a year on a worldwide basis, including hybrids, battery-electrics and engines powered by fuel cells and natural gas. It's a costly but necessary effort to meet new rules in Japan, Europe and the U.S. requiring automakers to sell more vehicles with zero- or ultra-low-emissions powertrains.

Meantime, Prius faces its first direct rival with the spring 2002 debut of Honda's Civic Hybrid sedan. Drivetrains are closely matched, but Honda's second hybrid-power car, depending on how it's priced, may well outpoll Prius with its more conventional design and driving characteristics. No word yet on how, when, or even if Toyota will respond.

2002 Toyota Prius - Consumer Guide Automotive

It takes an 'operational profit' to allow production to ramp up. Sure enough, Prius production and sales have ramped up to a maximum of 180,000 units per year for the past two years. Toyota ran out of Prius in May 2008 when monthy sales dropped ... they didn't have any more to sell!

Now if someone wants to believe the Prius is "not profitable," the most recent paper came from "Jean-Jacques Chanaron and Julius Teske," is such a paper that I'm sorry to say I bought so I could review the source material. It is nonsense, humbug, and junk science that cost me $40 to confirm! (For sale, slightly used paper, read only a couple of times! Cheap!)

You are darn right I'm unhappy with unnamed sources who make unsupported claims. Those who perpetuate such claims are at best lazy with the truth but most likely just lying their ass off under the guise of spreading a rumor, "something I heard."

Bob Wilson

[ronhowell]

Whether Toyota are making money or losing money on a per-unit basis depends entirely how they have allocated the fixed, non-recurring costs associated with the Prius development and production program.

Usually, in any major new program like this the selling price point and the forecast market size are key variables, determining how much of the non-recurring costs (R & D, setup tooling, sales & admin. etc.) are allocated to the sales price on a per-unit basis. So the early units often remain unprofitable, on a program basis, until the break-even volume is reached; at that point the major non-recurring costs are recovered and each additional car sold contributes more to the program profit.

After the 10 years that the Prius has been in production, even with the generation change in 2005, I am sure the overall program is profitable, with each additional Prius sold contributing significantly to Toyota's bottom line. As was mentioned in a previous post, why else would Toyota be planning an assembly facility in the U.S.?