Yesterday, Toyota announced that they’re cut the price of the Prius by $2000 and added $2500 worth of standard equipment, putting the base price of the hybrid at about $30,000.
Why they do that?
Because Toyota has fallen seriously behind in battery technology and is attempting to gain market share before GM bombs them with the Volt, at about the same price.
Toyota is in serious trouble, so it’s doing what automakers always do when they can’t sell on merit: they cut the price.
The next Prius, based on spy photos, looks almost indistinguishable from the last one. That’s always been the problem faced by a manufacturer that produced a new and distinctive car. The second version can’t be too different, or it loses the cachet of the first one, but if it’s not very different, it can’t be distinguished from its predecessor.
Originally, the shape of the next Prius was intended merely to identify it, not sell it. Toyota planned lithium ion batteries for this car, so it would be the first mass-market “plug in” hybrid. But Toyota couldn’t make the lithium ion batteries work. Not only is Toyota stuck with the same batteries they’re using in the current Prius, they’re stuck with the look of the current (pardon that) Prius. The look of the current Prius is reminiscent of those minivans which GM built a decade ago, the ones that were referred to as “Dustbusters.”
All of this is hitting just as Toyota’s product plans were supposed to be in high gear, with the Prius spawning a completely new brand of hybrid vehicles. Much as the Scion set out to capture the youth market, the Prius would capture the green, global warming, politically correct crowd.
All of that, however, hinged on getting the batteries right.
Instead, Toyota got the batteries wrong.
So, they’ve decided to build brand identity the old-fashioned way:
By giving away the product.
They’ve done it before. That’s how they established the Lexus brand in the United States.
This time, however, it may not work.
It is very clear that General Motors would like nothing more than to humiliate Toyota. At GM, it’s personal. GM gets blasted for building Suburbans while Toyota builds Tundras, yet is considered ecologically and environmentally conscious because of the Prius. Add to that the possibility that Toyota could overtake GM in worldwide sales, and the incentive to stick it to Toyota become overwhelming.
GM seems to be planning to deliver the product, on time, at a price Toyota can’t beat, and with features – including plug-in technology – that makes the Prius stale beer.
If – and it is a big if – GM doesn’t screw this up by bringing a car to market that gets recalled twice in the first six weeks, and if – again a big if – GM can train their dealers’ sales personnel how to treat the customer that will be interested in this car, and if – yet a third big if – GM can introduce this car with a lease rate that makes it impossible not to get one (even if it means they make no money on it), then GM will control the market.
It isn’t the first one who gets to the market that normally wins.
It’s the one who best understands a market that already exists who normally wins.
Don’t expect it to be Toyota, at least not this time.