That is certainly the thinking within the industry. 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.

http://industry.bnet.com/auto/1000395/how-bad-is-us-auto-market-toyotas-losing-money-too/

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

Detroit and Japan are worlds apart in more ways than one. Toyota's in it for the long term. Even if they did lose money on the Prius at first - and it all depends how the development costs are counted - they'd stick with the game plan. The brand recognition alone is probably worth it, and if GM still can't figure out how Toyota does it, they don't deserve to be in business.

Well if they're not making enough money on the Hybrids why would they even think about opening a new hybrid plant in America. With a new plant comes money to build the plant, money to pay the employees, and money to get everything going. All that money just to get the unprofitable hybrids built!?

I think they might be keeping secret on how much they are really making to keep other auto makers at bay on trying to compete with the hybrid market with themselves, not to mention other auto companies that have come up with there own hybrids. Cause if you look at how much indemand the Prius was a couple of months ago, other car companies saw that the consumer really did want to purchase a hybrid and not just some other regular fuel effecient car at a lower cost. Then everyone probably said," oh look, Toyota got themselves a hot selling car thats a hybrid, time to come up with our own." But since Toyota set the example and then say they're not making any real profit off it. Then other car companies might say,"If Toyota cant do it then how are we going to do it."

But another example is if the Detroit 3 really wanted money to develop more fuel efficient cars then why did they first produce hybrid trucks and suvs that get just a little more mpg, but up the total cost of the vehicle just wasting the point of more mpg. Oh yeah so that celebrities can say that they drive green because they drive a hybrid!

Thats why the Detroit 3 should just spend that money to get their fuel effecient cars that they make over seas and fix them to comply our safety standards and emissions. Because that might be the only way to make a profit instead of trying to make hybrid that even Toyota cant make a profit upon!

Sorry I must apologize for the spelling and run on sentences and the ranting i did in the last three paragraphs as i was in a hurry to eat lunch!

Auto Beat Chrysler's Jim Press And Toyota Differ on Prius Narrative - BusinessWeek

How much help did they provide developing the Prius?

"The reason we started with a $100,000 sports car is that when technology is new it tends to be expensive," says Elon Musk, the co-founder of PayPal who is the chief executive of and a big investor in Tesla. "It just takes time to optimize the right design and work up to economies of scale. . . . Why we didn't start with a Honda Civic is that it would be a $70,000 to $80,000 Honda Civic."

Imagine how GM can sell the Volt under $40K.

when you consider that the Prius was sold at or near MSRP since day 1. i find it difficult to believe that they did not make any money on it. i also read reports that they broke even around mid 2005... that is several hundred thousands Pri's ago...

so we have one report says yes, one that says no... so, who we believe?

Toyota "is still widely believed by analysts to be losing money on each [Prius] sold." A statement without attribution is not very credible. Can it be FUD encouraged or tolerated by Toyota as a way of discouraging competition?

Smoking resistance used that same "raising doubt" technique.

They'd refer to unknown so-called experts with the hope of making you question something that the well-informed already knew wasn't true. Many naive consumers fell for it too. Others used that as an excuse to not change.

Undermining progress is their hope. And in the case of hybrids, it has been quite effective at slowing down acceptance. That's really sad.
.

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 $.

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

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.

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.

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)?

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.

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.'

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.

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

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.

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.

So we are faced with this interesting quote:

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

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.?