July 8 (Bloomberg) -- Toyota Motor Corp., with as little as one day’s worth of Prius cars on dealers’ lots after the March earthquake, says sales of the hybrid will still beat 2010.
Asia’s largest automaker is racing to replenish supply after the lack of inventory led to a 61 percent drop in Prius deliveries in the U.S. in June, to the lowest level since September 2004. Almost half of Prius models are sold in the U.S., where the car accounts for more than 60 percent of hybrids sold since 1999, according to data supplied by automakers.
Prius, the company’s No. 3 selling car after the Corolla and Camry, is the fastest-growing Toyota car this year, even with the quake-depleted inventories. Demand for efficient autos has increased this year with higher fuel prices. General Motors Co.’s Chevrolet Cruze was June’s top-selling car in the U.S., while deliveries of Ford Motor Co.’s Focus rose 41 percent.
“Dealers simply cannot get their hands on them quick enough,” said Ivan Drury, an analyst for Santa Monica, California-based Edmunds.com, an industry pricing and data website. The model “is easily the poster child for inventory issues.”
Toyota’s American depositary receipts, each representing two ordinary shares, fell 24 cents to $84.40 at 4:03 p.m. in New York Stock Exchange composite trading. The ADRs have risen 7.3 percent this year.
Prior to the Japan quake, Toyota targeted Prius sales in 2011 that would top the car’s 2007 peak of 181,221. While that level may be out of reach for now, Toyota can still exceed 2010’s deliveries of 140,928, said Donald Esmond, Toyota’s senior vice president for U.S. sales.
Production of Prius and two Lexus hybrids is rebounding faster than Toyota first estimated after the 9-magnitude quake in March. The company expects to be back at full output by September, rather than its earlier target of late 2011. The lack of available hybrids from Toyota has held the segment to 2.1 percent of industrywide U.S. sales so far this year.
Even though Prius isn’t among the automaker’s most profitable lines, Toyota sees it as the best opportunity to win new customers in the next few years, said Jim Lentz, president of Toyota’s U.S. sales unit. The nameplate will be expanded to include the Prius v wagon, Prius c subcompact and plug-in Prius.
“By the end of this decade, the Prius nameplate will be the number one passenger car nameplate in the industry,” Lentz said in a July 6 phone interview.
Boosting Prius supply, along with the introduction of the wagon version and a revamped Camry sedan later this year, gives the Toyota City, Japan-based automaker a shot at making up for some sales lost in May and June.
Toyota also wants to ease a backlog for Prius that’s pushed the wait time for consumers to as long as three months in some parts of the U.S. from none at the start of the year, said Jesse Toprak, an industry analyst.
“At the moment, it’s the least available of any mass-produced vehicle,” said Toprak, with Truecar.com, an industry pricing and data company in Santa Monica.
U.S. demand for fuel economy is up this year as gasoline prices approach 2008’s record of $4.114 a gallon. While the fuel cost an average of $3.569 per gallon on July 5, down from $3.985 on May 4, the price is up 30 percent from a year ago, according to AAA’s Daily Fuel Gauge website.
Higher prices at the pump buoyed sales of subcompacts and small cars, with such vehicles rising 21 percent this year through June, according to Woodcliff Lake, New Jersey-based Autodata Corp. That compares with an 11 percent gain for midsize cars and a 4.7 percent drop for the large sedans, Autodata said.
Prius’ fuel-economy appeal has never been higher, said Bob Carter, Toyota’s group vice president for U.S. sales.
Interest in the car was up 36 percent in June from a year ago, based on consumer visits to Toyota’s Prius website, according to Edmunds.com, an industry pricing and data website.
“I have extremely high demand, and the outlook is continuing to improve,” Carter said in a June 22 interview.
Failure to ramp up supply quick enough may blunt Toyota’s goal to notch its first U.S. annual sales gain since 2007. It also risks driving some buyers to models such as Ford’s hybrid Fusion sedan and Hyundai Motor Co.’s new Sonata Hybrid, said Toprak.
The growing selection of highly fuel-efficient, gasoline-engine small cars also threatens to lure away potential Prius buyers, said Edmunds.com’s Drury.
“Some consumers might be willing to wait, but as time goes on and awareness of the many redesigned compact cars becomes higher, Toyota could suffer,” Drury said.
Sales of the Prius in the first half were 66,520, little changed from 66,039 a year ago, when recalls of Toyota and Lexus models temporarily damped demand. Prius accounted for 8.2 percent of the company’s U.S. sales during the period, while Camry deliveries were 18 percent and Corolla sales were 16.8 percent.
Toyota’s U.S. sales in the second quarter “slowed as inventories dropped and as a result, we find ourselves at virtually the same position we were a year ago on July 1,” Esmond said on July 1 conference call. “We won’t finish the year that way.”
While Toyota’s Tsutsumi, Japan, plant that makes Prius and its Kyushu factory that builds hybrid Lexus CT200 hatchbacks and HS250 sedans weren’t damaged by the March 11 disaster, parts needed for the cars grew scarce because of damages to suppliers’ operation.
The automaker prioritized production of the three gasoline-electric cars after determining they were in the highest demand, said Shiori Hashimoto, a spokeswoman for the Toyota City, Japan-based company.
“We worked hard to find out which components were critical, conditions of the supply chain, and how the limited car parts should be delivered to which assembly lines,” said Hashimoto, who is based in Tokyo.
To restore Prius production as fast as possible after the quake, Toyota began sending about 150 workers from other factories in Japan to the Tsutsumi plant in late March, said Tomotaka Yagai, a spokesman at Toyota Motor Workers’ Union in Toyota City. Hashimoto declined to confirm the figure.
So far, Toyota has only confirmed the U.S. will get a shipment of 36,000 Priuses that will arrive from this month, with more on the way, Carter said.
“I can’t give you a specific number, but it will improve significantly,” he said, without elaborating.
Billy Rinker, general sales manager at Toyota Santa Monica, said a fresh supply of the cars has been arriving since late June. The Los Angeles-area dealership claims to be the largest seller of Prius in the U.S., with average monthly sales of 100 to 150 of the hybrids, he said.
“We only had 30 to sell last month, but July looks like we’ll be back to about 80 percent of normal,” Rinker said. He estimates the dealership will sell about 100 this month.
That won’t eliminate the dealership’s backlog. “We’re still keeping a list and taking deposits for the car,” Rinker said.
With the Prius v wagon, followed in 2012 by the subcompact Prius c and plug-in Prius, Toyota expects its “Prius family” to become its top-selling line within the decade, Carter said.
“A lot of our future plans are centered around the Prius and that goes into vehicle launches next fall,” he said.
Toyota said July 1 a new Camry and Camry Hybrid, Scion iQ minicar and revamped Yaris subcompact will arrive this year along with the v wagon.
The company is counting on those models, together with the jump in Prius supply and rebounding inventory of all its Toyota, Lexus and Scion products, to reverse a 4 percent slide in U.S. sales through June.
“It’s coming back quicker than any of us expected,” said Paul Atkinson, whose dealership in Bryan, northwest of Houston, ran out of Prius cars last month. “Now it’s time to go out and sell like hell.”
To contact the reporter on this story: Alan Ohnsman in Los Angeles at firstname.lastname@example.org