Petrol price key to Prius

THE Toyota Prius is a byword for green motoring. Driving one is seen as a sure way to indicate you care for the planet, as evidenced by the fact that both the prime minister Kevin Rudd and opposition leader Malcolm Turnbull have one parked in their garage.

The rise of the Prius, which has just ticked over into its third generation, is striking in terms of both sales and its marketing impact.

According to VFACTS figures, Prius sales stood at a miserable 201 in 2002, and yet Toyota Australia managed to shift 3413 of them last year. The recent growth spurt is especially impressive given the second-generation Prius has been around since 2003.

Environmental awareness is one of the main reasons for the growth, but the dramatic rise in petrol prices has had a more pragmatic effect.

It is difficult to determine the weight of each factor in the buying decision, but there is no doubting the rise of the Prius has matched the recent spike in fuel prices.

According to CSIRO data, a barrel of oil cost around $US30 ($A38) at the end of 2003, the year that Prius sales totalled just 292. In 2006, Prius sales totalled 1974 when the oil price peaked $US80 ($A101) before dramatically dropping back to $US50 ($A63) by January 2007.

Last year, oil prices then more than doubled, climbing to about $US118, sparking fears of supply constraints, predictions of $8-a-litre petrol within a decade and liberal use of the term ‘end of oil’.

Left: Honda Insight.

A remarkable increase in Prius sales occurred in the same period. After shooting to 3176 sales in 2007, Prius climbed to 3413 units in 2008.

But with a return to more normal price levels for petrol, Prius sales have slid backwards in the first half of this year, standing at 1211 to the end of June compared with 1787 for the same time last year.

No doubt, sales of Prius have also been impacted by the impending arrival of the new-generation model and Toyota’s refusal to discount the ageing car due to the high cost of production.

But Prius continues to dominate the hybrid landscape in Australia. While Toyota’s luxury division Lexus owns the hybrid highway at the top end of the market, the Prius’ one true rival at a more mainstream level, Honda’s Civic Hybrid, recorded 813 sales last year – less than a quarter than that of the Prius.

One of the reasons the Prius message has been so well communicated is because it is a unique model with its own shape rather than an existing model with an optional hybrid version, as is the case with the petrol-electric Civic.

Now Honda has reintroduced the dedicated-hybrid Insight overseas, and it is selling strongly.

The Insight is due on sale in Australia in the second half of next year, and it promises to make life a bit harder for Toyota’s small green hero.

Prius’ green image and low running costs make the Toyota hybrid popular with fleets despite its relatively high price.

Of the 4448 hybrid passenger cars sold in Australia last year, only 1436 hybrid passenger cars were purchased by private buyers compared to the 3012 bought by business and government fleets.

Whichever way you cut it, business and government fleets are the main buyers of hybrids, and the Prius is the favourite.

While the new-generation Prius is more likely than ever to appeal to private customers and businesses, it will face its biggest challenge from another Toyota.

Government fleets, especially those of federal and the state governments of car manufacturing regions, Victoria and South Australia, have a ‘buy local’ policy that has only recently been over-ridden by the ‘buy green’ policy that has led to so many Prius sales.

From early next year, they will be able to buy local and green with the Camry hybrid built at Toyota’s Altona plant in Victoria.

GoAuto understands the Victorian and federal governments have already given Toyota their word they will purchase a considerable percentage of the initial 10,000 Camry hybrid production run.

It is hard to see how this will not impact on Prius sales regardless of what happens to fuel prices.

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