IS THE PRIUS MAKING A PROFIT ?

We had a lot of heated discussions about Prius profitability at this forum:

http://priuschat.com/forums/1-vt2873.html?...er=asc&&start=0

Don't be surprised to see some hate mail...

 

A pricing scheme that entails recovering development costs early makes the first units totally unaffordable. No mfg can claim to make a profit on the first cars sold after a redesign if they have to recover the R&D costs as part of the calculation.

 

Why does this issue keep coming up? Who cares? What company has ever developed a product for free?

Research and development is always a risk, and it takes time to find out if the investment was profitable or not. "Return on Investment" is the amount of time it takes to make a profit after paying for the initial research, development, and capital expenses. If I were an executive or shareholder in a company, I would be interested in the payback period. As a consumer, I am only concerned with initial cost, operating costs, maintenance cost, and possibly how long the product will remain on the market.

Lets not forget that Ford, GM, and Chrysler were given $1.5B of our tax dollars for the research and development of a hybrid vehicle, and all of them failed to produce a commercially viable product.

Congratulations to Toyota and Honda for sucessfully developing and selling hybrid vehicles to the general public. Their dedication to the continuous improvement of their product line should be an inspiration to other corporations, especially here in the United States.

 

I care very much. American business seems to focus on short term profits and that philosophy will be the end of us.

What Toyota is doing is a profound change in management style from the traditional American one. And I think the Prius is proving the superiority of that style.

I happen to like the USA and feel it would be a shame for us to lose our leadership in the world.

That's why I care very much about this Prius business model.

 

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Talk about being inscrutable, you were the one who wrote the article. If you don't care, why the diatribe on Toyota's business practices? If you truly don't care, why the concern about receiving a response?

To reinterate, who cares?

 

WHAT AN IDIOT!!

that is the same as saying that the first H1 hummers that came out at $120,000 were unprofitable also...

what an idiot!!

 

Perhaps even worse than the H1 analogy as the Prius represents a new technology that will migrate to other platforms further mitigating the R&D costs over time.

 

the sad thing is that many people will be suckered into the writers cracked logic and will just create resistance to the Prius movement.

what makes it more difficult is when fighting a resistance based on fallacies. people will read the article, and only remember the high points of the story; that Toyota is dumping the Prius at a loss on the american market.

this is the same story that went around for the corolla back in the 80's. well Toyota wasnt losing money on the corolla and its not losing money on the Prius.

we are talking about the fastest growing and richest (by far) automobile company in the world. they do not market any product for a loss internationally.

several times they have admited that they do exactly what most japanese electronic firms do when they test market a vehicle in japan to determine whether it would viable in a larger market. its during this time when they determine if they can build the vehicle at a price that will bring a profit.

and the stories about building cars cheaper in japan and dumping them in the us for cheap is bull. it costs MORE to build a car in japan than in the US. their cost of living is higher than ours is. that balance did shift for a few years when the yen suffered in value against the dollar, but that isnt true any more. so cars built in japan have to be done very cheaply to still make the money.

A Prius built in the US will bring a lot more money to Toyota, but there is also a supplier problem (ask ford about that) which im sure has complicated matters, but you can be assured that Toyota is working on a US site right now. they may have not announced anything yet, but they are definitely working on it.

 

the author's email address is at the bottom of the OP. i think if you disagree with him, maybe you should send him an email. here is the one i sent him

this is in response to your article that was quoted at www.priuschat.com

in the editorial, you questioned Toyota's ability to make a profit sellin the feature laddened Prius for just over $20,000. You said that until Toyota can recoup the cost of R&D, then the Prius is being sold at a loss.

Sir, i must ask you... are you a former accountant?? because they are the only group i know of with logic as cracked as yours. We are not the IRS. there is no need to double talk us into believing something that isnt true., so what is your real agenda here?

is your acknowledgement of the Prius' acolades given grudgingly? basically only accepting the blantantly obvious? are you afraid that you will not be able to drive your 6,000 pound, gas guzzling, 7 passenger vehicle to work alone for much longer?

i guess maybe i should tell you my impression of what "selling at a profit" means by starting with what does "selling at a loss" means. mind you, i am not an accountant, so this maybe counter to your definition, but selling at a loss means that continuing to sell "product A" at "Price B" will create a greater imbalance on the books towards the red.

so that means selling at a profit would be...well, i think you can take it from here.

 

the california governator just returned from japan seeking to get an auto factory built in ca.