According to Japanese industrial daily Nikkan Kogyo Shimbun, Toyota is postponing the launch of the next generation Prius by six months. 

The question is why.

Toyota previously acknowledged that it would not have lithium ion batteries for the new Prius, because the technology had not sufficiently advanced to permit the use of that type of battery with safety to potential purchasers.

But there may be more to the story.

The Prius is reported to be a loss leader for Toyota.  According to the Japanese newspaper, Toyota will increase Prius production by 40% this year, to 280,000 vehicles.  But it still doesn’t expect to get much of a profit from the deal, because the hybrid system used by Toyota is expensive to produce. 

Delaying launch of the new Prius allows Toyota to amortize the costs of production of the old model over a longer term, which may mean the difference between showing the Prius as profitable or a loss on Toyota’s books.

It also allows dealers to move out inventory that Toyota has thrust on them.  Lately, Toyota has begun to use incentives to move the Prius, a sure sign that the car is no longer fashionable.  Early sales of the car were bolstered by a federal tax benefit that has since been repealed. 

Moreover, the Prius’ value on the used car market is problematic because it is anticipated that the battery pack will have to be replaced at about 80,000 miles.  In terms of expense, that’s equivalent to putting a rebuilt engine in your Chevy at that mileage.  That doesn’t add to the resale value of the car.

So why is Toyota delaying the new Prius?

Same old same old.

It needs to move the metal. 

Just like GM.