Slow sales acceleration foreseen for cleaner cars

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The future has arrived, with the introduction of several cleaner cars powered by engines that combine gasoline and battery power. But observers expect initial sales will get off to a slow start.

American Honda Motor Co. is first to the mass consumer market with the Insight, a small, two-seat coupe. Following this spring is Toyota Motor Sales USA's Prius five-seat sedan, and industry-watchers expect similar vehicles from General Motors Corp., Ford Motor Co. and the Chrysler brands of DaimlerChrysler within three years.

State clean-air regulations in a dozen northeastern states and California are the engine driving the so-called hybrid engine vehicles, said Thad Malesh, director of advanced vehicles at consultancy J.D. Power & Associates.

Although initially produced in limited numbers, within five years "the numbers will ramp up pretty quickly," Mr. Malesh predicted, because even-stricter vehicle emission regulations are due.

Even so, he projected that by 2006, the segment will generate industrywide sales of between 50,000 and 100,000 units annually. That's hardly a watershed figure -- the Mercury Cougar, for example, sold 57,000 units last year.

The automakers are producing only limited numbers of the hybrid vehicles to try and gague consumer acceptance of the new models. They are also aware of consumer misconceptions about the need for recharging and limited driving ranges -- concerns that are being addressed in advertising.

Insight was launched modestly with one TV spot and several print ads in mid-December, but the big push, from Rubin Postaer & Associates, Santa Monica, Calif., is starting now.

The TV campaign carries Honda's existing corporate tagline, "Honda thinking." Print ads, started in January magazines for the Honda Division car brand are product-focused, said Joan Egan, account director at the agency. The main magazine blitz continues through the first quarter.


Toyota Motor Sales USA's Toyota Division starts selling Prius in late spring. The carmaker's Web site ( already has an area with Prius information, and Saatchi & Saatchi, Los Angeles, is developing the ad campaign.

Even before the launch, however, Prius is getting a boost in national print ads from Toyota Motor Corporate Services of North America, which next month extends a print campaign begun last summer.

The ad, from Oasis Advertising, New York, touts the company's environmental consciousness, featuring the Prius with the copy, "A car that sometimes runs on gas power and sometimes runs on electric power, from a company that always runs on brain power."


The second round of ads arrive in Discover and Life, which go on sale the second week of February. The buy expands to newsweeklies, Audubon, The New Yorker and People, and will run through March. That effort features Prius as its centerpiece and directs consumers seeking more information to its 1-800-Go-Toyota toll-free phone number, or the environmental area of Toyota's Web site (

30,000 IN JAPAN

Toyota said it sold 30,000 of the Prius models in Japan since it went on sale there in late 1997. But Toyota is juicing up the Japanese model, which offers 58 horsepower, with more pep to suit American tastes.

Mr. Malesh said that although both Honda and Toyota will have no trouble selling out their projected 6,000 units each this year, the car marketers will have to advertise heavily to explain the so-called hybrid-engine cars to consumers.

He said J.D. Power's June 1999 survey of 500 consumers in states with strict emissions laws revealed 75% were unaware the batteries of hybrid engines don't need to be charged.

The cars run either on the battery or gas engine, or on both. Prius, for example, Mr. Malesh said, uses both engines, except when the car starts from a dead stop. Then, it uses only the battery engine, causing minimal emissions.

In that, the new hybrids differ from General Motors' industry-first, all-electric EV1 car, which needed a battery recharge after traveling about 70 miles. GM launched EV1 with much fanfare in late 1996 in four western states, but sales of the lease-only model never took off. GM earlier this year pulled the plug on EV1.

Mr. Malesh said consumers found the EV1 too costly (in the $35,000 price range) and its driving range before recharging too limited.


Toyota hasn't announced a price range for Prius, but the Honda Insight will start at $18,800. Insight gets 70 miles to the gallon, with horsepower up to 73. Honda expects three different types of consumers to buy its car.

The first: married, college-educated males with an average age of 48 and average household income of $75,000. Another group consists of single, urban drivers between the ages of 18 and 25 with an average household income of $45,000. The last group of Insight buyers are expected to be families, with one or two vehicles and household incomes around $55,000. They are likely to be retired.

Jack Trout, president of marketing consultancy Trout & Partners, doesn't believe hybrid cars will have wide consumer appeal. "The general public wants other things from cars besides 70 miles a gallon," he said.

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