Prius Prices Outrun Inventory

Consumers Clamor for Fuel-Efficient Cars; Used Models of Red-Hot Hybrid Command Top Dollar

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DETROIT ( -- Who says iPhones are the summer's hottest product? In June, a used 2008 Prius with almost 8,000 miles on the odometer sold for nearly $1,300 more than a new one.
The 2008 Prius could run you $1,300 more if it's used.
The 2008 Prius could run you $1,300 more if it's used. Credit: Rex Arbogast

There aren't enough of the world's first mass-produced gasoline-electric hybrids to go around. The cars are flying off dealer lots in four to five days, said Tom Libby, senior director of industry analysis at J.D. Power & Associates' Power Information Network. Some auto dealers are going so far as to contact owners, offer to buy the cars back at their original sticker prices and resell them at a higher price, presumably ringing up profits twice for the same car, Mr. Libby said.

Soaring gas prices and nervousness over how much more they will climb has played a role in Prius' ascent, said Tim Longnecker, auto analyst at consultant Acxiom, but image is also a factor. "Some people want to be identified immediately as driving a hybrid vehicle," he said. And unlike all the other hybrid models in the market, the Prius isn't available in a version powered solely by gasoline.

Whatever the reason, the numbers are indisputable. Toyota sold 181,221 new Prius hybrids in the U.S. in 2007 compared with 106,971 the year before. And despite the industry's worst new-vehicle sales year in a decade and a half, Toyota is on track to top that, with 110,565 units sold so far this year.

That's with less than $100,000 in measured media backing the brand in the first quarter of this year, according to TNS Media Intelligence.

Success story
Globally, Japan's Toyota Motor Corp. said in May it reached the 1 million mark on cumulative Prius sales in April since it first went on sale in Japan in 1997 and in the U.S. and other markets in 2000.

Better news yet for the automaker: Acxiom found that four out of five Prius are new to Toyota Motor Sales USA. "That's a huge conquest" number, said Mr. Longnecker, some 10 points greater than other hybrid models, including Toyota's Camry and Honda's Civic. But a spokeswoman for Toyota Division said the marketer's research revealed different data: Two out of three buyers for the new Prius come from other Toyota models.

With such demand, advertising seems pointless. The only national advertising Toyota is doing for the hybrid sedan is on third-party auto websites, the spokeswoman said, and there are no plans for any other kinds of national advertising this year. She declined to comment further. Saatchi & Saatchi Los Angeles, in Torrance, Calif., is the agency. Toyota spent $4 million in measured media for Prius in the first three months of last year, according to TNS. It spent $27 million for full-year 2007.

It makes no sense for Toyota to do national Prius TV ads now, although the hybrid could be used in magazine ads to tout the brand's fleet of fuel-efficient models, said Charlie Hughes, president of consultant BrandRules.

For now, Toyota doesn't have enough Prius inventory in the U.S. The issue is a short supply of the special batteries, but Toyota is pushing its supplier to double or even triple global production in the next 12 to 16 months, said Todd Turner, president of consultant CarConcepts.

A few weeks ago the automaker announced plans to start making Prius in the U.S. for the first time. A plant under construction in Mississippi is due to start production in late 2010.

But even the strength of Prius sales in the U.S. hasn't spared Toyota Division the same pain as other competitors when it comes to big trucks and SUVs. The brand's sales through July slumped 7% to 1.28 units vs. the same period a year ago; the Tundra full-size pickup was off 15.6% to 89,929 during the period.
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