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Toyota Seeks Low-Cost Hybrid Hit in the U.S.

Toyota Motor Corp. (7203), the biggest seller of gasoline-electric autos, wants to spur U.S. demand for its hybrids with a smaller, cheaper version of the Prius, a goal that eluded Honda Motor Co. (7267) with its Insight.

Toyota wants to sell as many as 40,000 units this year of the subcompact Prius c that goes on sale in March, Bob Carter, group vice president for U.S. sales, said in an interview. That would be double the best annual sales Tokyo-based Honda has had in the U.S. for its low-priced Insight hybrid.

“It’s going to appeal to a younger buyer at a price that’s more affordable,” Carter said Jan. 31 in La Jolla, California. “It will add substantial incremental sales to Prius this year.”

Toyota, based in Toyota City, Japan, is targeting a U.S. sales gain of more than 15 percent this year to 1.9 million Toyota, Lexus and Scion vehicles, and a 21 percent rise in global deliveries to 9.58 million autos. The U.S. increase will come from increased sales of all Prius models, Camry sedans and gains for Lexus luxury models, Jim Lentz, head of sales for the region, said in an interview in Las Vegas this week.

Toyota, Asia’s largest automaker, has a U.S. goal of selling at least 220,000 units of the four-model Prius line this year, comprised of the main Prius, the Prius c, Prius v wagon and a plug-in version of the hatchback that can go 15 miles solely on battery power before running as a conventional hybrid.

“Selling 40,000 looks a bit challenging, but it’s possible,” said Jessica Caldwell, an auto sales analyst for Edmunds.com in Santa Monica, California. “The average fuel- economy point of over 50 mpg city is going to be very attractive to a lot of people.”

Shorter, Lighter Prius

The base Prius c, which includes hands-free Bluetooth phone controls, is priced at $18,950. A grade “Three” version of the car for $21,635 adds navigation and a higher-end audio system. Top-end grade “Four” is $23,230, and includes heated front seats and alloy wheels. A regular Prius starts at $24,000 and rises to $29,805, according to Toyota.

Prius c is 19 inches shorter, 1 inch lower and 542 pounds lighter than a standard Prius, Toyota said.

The small 5-door hatchback may be rated by the U.S. as getting 53 miles per gallon of gasoline in city driving, 46 mpg highway and 50 mpg combined, the company said.

Honda’s compact Insight, Prius c’s closest competitor, starts at $18,350 and averages 42 mpg. The company, the second- biggest seller of hybrids, initially planned to sell at least 90,000 Insights in the U.S. annually when the car went on sale in 2009. Its best year so far was 2010, when Honda sold 20,962.

‘No Shame’

Since Prius has achieved a certain “cachet” that eludes most economy-minded cars, that helps Prius c, Caldwell said.

“There’s no shame associated with driving one,” she said. “They’re targeting young singles and couples, but it’s probably also going to attract a lot of baby boomers who want a very fuel-efficient, affordable car.”

U.S. hybrid sales have fluctuated with gasoline prices, rising when pump prices soared and falling as fuel becomes more affordable. Sales of such vehicles dropped last year to just 2.2 percent of industrywide U.S. auto sales, from 2.4 percent in 2010, according to researcher LMC Automotive.

That was mainly due to a plunge in Prius inventory after last year’s earthquake and tsunami in Japan cut production, Lentz said in a January interview.

Honda’s Insight went on sale in 2009 as gasoline prices tumbled, as the recession cut demand. Toyota’s timing may be better. Regular grade gasoline cost an average of $3.48 a gallon on Feb. 7, according AAA’s Daily Fuel Gauge Report. That’s up 10.9 cents from a month ago, and 35.8 cents from a year ago.

Fuel Prices

Prices may be going higher. The U.S. Energy Department yesterday increased its crude-oil price projection for 2012 to $100.40 a barrel this year from $100.25 a barrel in January.

“On the strength of the Prius name, the car is going to bring in interested buyers, but fuel prices are going to have to keep rising for the company to reach its target,” said Alan Baum, principal of Baum & Associates, a provider of automobile- industry analysis in West Bloomfield, Michigan.

Toyota’s U.S. sales unit is based in Torrance, California.

To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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