Prius automatically switches Essay Example for Free

Prius automatically switches EssayThere argon many reasons why state want a subversive car. Some enthusiasts enthuse about scientific and technological advances and want the latest gizmos. Others rebel against fuel expenditure increases, even though fuel is cheaper than it has been for decades. Finally, people are concerned about the environment. Hoping that all the above was true and looking to grab a technological advantage over other car manufacturers in 2000 Toyota introduced Prius, their first cross car. Prius means to go before, so is a name that may be very prophetic. The Prius and the Honda Insight are the first in a wave of hybrid family cars coming out ahead of similar vehicles from GM, Ford and Daimler Chrysler. At first glance, the Prius seems to have a lot going for it. It combines a 1. 5 litre, four cylinder petrol engine and a 33-kilowatt electric motor. It comfortably seats five, if the three in the abide arent too statuesque or too big and has 0,34 cubic m eters of luggage space. The electric motor starts the car and operates at low speeds, using a nickel note metal-hydride battery. Under average motorway conditions, it should germinate 28 km per liter.The downside is that the Prius is no muscle car. It withal costs about 4,000 euros more than the Toyota Echo, although they are nearly the same car. Of course, getting in dickens ways as many kilometers per liter of petrol will help to offset the price differential. Assuming the range and a typical 2002 price of one euro per liter, the Prius owner would have to buy 4,000 liters of petrol, enough fuel for 112,000 km, which could take long time. Of course, if prices were to rise drastically, that could change. But even if prices doubled-which is not likely-youd have to drive more than 50,000 km to control up the initial price difference.The picture gets even gloomier when you realize that no one is going to get the estimated fuel consumption anyway. The Environmental Protection ex ecution (EPA) has admitted that its testing procedure overstates petrol mileage by as much as 15 per cent. It tests cars on a chassis dynamometer, where the driven wheels turn freely on a set of rotating drums-far from normal driving conditions. In addition, hybrids use regenerative braking to recharge their batteries, with the result that braking during the EPA driving cycle is feeding more energy back into the system, boosting estimated petrol mileage.Although this offers a fuel saving, the boilersuit cost of ownership looks less attractive. Compared with the family Car of the Year 2004, the conventionally supplyed Toyota Avensis 1. 8 T3-S, the Prius looks poor value. Although the Prius saves on fuel, its overall running cost comes out higher than that of the equivalent Avensis. The reason is its 25 per cent higher service or contract hire cost. On the brighter side, Toyota and its competitors gestate that costs will decrease once production of hybrids begins to yield economies of scale. The benefits of scale would not stop with the producer.For example, a major part of the cost of the car is the nickel metal-hydride batteries. A company such as Panasonic could reduce the cost of producing batteries through research and development, it the market merited such an investment and could further reduce the price of batteries through its own economies of scale. However, realizing that cost reductions are a way off that fuel savings arent going to be the key to convincing people to purchase the Prius, car manufacturers have asked for tax incentives to stimulate purchase of clean-fuel and high-mileage cars. Several regimes are providing incentives to people to buy hybrid cars.The US government offers $ 2,000 federal income-reduction and the UK government offers reduced car tax on initial purchase. Electric car drivers can also avoid Londons GBP 5 per day over-crowding Charge. Are consumers ready for hybrids? Do improved gas mileage and emissions standards affect their buying decision? A glance at car sales in the last 10 years would suggest not. The biggest sales growth was in gas-guzzling 4 x 4s. After all, we rarely saw Range Rovers 10 years ago, now theyre a fairly common sight. People, it seems, think its a good idea for their neighbors to drive green machines, not themselves.Actually, when the Prius was introduced, it flew out of corpuss showrooms. Between July and October 2000, Toyota sold 2,610 Priuses and had difficulty keeping up with demand. By the end of October 2000, the cars were waitlisted until January. Of course, much of that sales success is attribut commensurate to Toyotas clever trade. two years before introduction, Toyota began educating consumers about the Prius. The company established a website to distribute information and also sent e-brochures to 40,000 likely buyers just before the introduction. Within two weeks. Toyota sold 1,800 cars based on the email message.In all, Toyota spent 15 million in 2002 promoting the Prius. There were print ads in magazines, but the bulk of the hunting expedition was in television advertising. Ads running before the actual introduction used the tag line A car that whatsoevertimes runs on gas power and sometimes runs on electric power, from a company that always runs on brain power. These ads helped to position Toyota as an environmentally concerned company and more subtly stressed the engine room aspect of the car. After introduction, the ads appealed more to emotion, with tag lines such as When it sees red, it charges a reference to the cars recharging at traffic lights.The newspaper headline captured the consumers attention through ambiguity. Only through focusing on the ad could the consumer learn why the headline was accurate. Again, the appeal is based on the technology of the car. Finally, Toyota took advantage of Earth Day to send out green seed cards shaped like Toyotas logo to prospective buyers, wrapped some Priuses in green, and gave away car s at Earth Day events. Of course, 15 million is just a drop in the ocean compared to Toyotas overall marketing budget of 200 million in 2002, but Toyota was satisfied with the effectiveness of the campaign, given the newness of the car and the motivating to explain its technology.Much of this success can also be attributed to the narrow targeting of the ads. The company expected the first hybrid car buyers to be techies and early adopters (people who are highly likely to buy something new). They were right. Many Prius owners are immersed in thee technology. They flood chat rooms with discussion of the car. The Priusenvy. com website urges owners to Kick some gas. Owners immediately began tinkering with the cars calculator system. One owner was able to add cruise control (an option not offered by Toyota) by wiring in a few switches in the cars computer system.The founder of priusenvy. com worked out how to use the cars dashboard display screen to show files from his laptop, play v ideo games, and took at rear-view images from a video television camera pointed out of the back of the car. One Austrian consumer installed a sniffer a device on the cars computer network that monitors messages. With the sniffer, he will be able to hook up add- ons such as a MiniDisc Player, an MP3 player, a laptop computer and a TV tuner. In the past, owners using mechanical skills customized cars with paint, take down bodies, and souped up engines.In the future, customization may rely on being computer savvy. Even though the Internet was a major part of the Prius launch, Toyota does not allot the car from its website. Buyers go to prius. toyota. com online to pick a color and decide whether they want a CD player and floor mats- the only options available from Toyota. After that, the dealers get involved, but it takes specially trained salespeople to explain and promote the Prius. Consequently, only 75 per cent of Toyota dealers handle the car. Many of them are not happy about the need to train salespeople. And why should they be?Margins are higher on gas-guzzlers, which are also easier to sell. Given dealer reluctance and consumer resistance, why have Toyota and Honda spent so much on their hybrids? While part of the answer is government regulations, a bigger part of the answer is competition. All car manufacturers concede that they will finally have to move to hybrids to raise petrol mileage and lower emissions, and all of them have plans to do so. Ford, for example, plans to introduce an Escape SUV that will get 17 km/litre. Daimler Chrysler says that 15 per cent of its sport-utility vehicles will be hybrids that will get 20 per cent better fuel efficiency than conventional vehicles.General Motors is betting on hybrid buses and trucks. Toyota hopes, however, that its early entry will be the basis for a system of hybrids from ultra compact minicars to luxury saloons, sport-utility vehicles, and even commercial trucks,. The mass market, however, value space, comfort, and power. Although hybrids may have space and comfort, power would appear to be elusive. Without greater power, it will be interesting to see whether consumers, who like speed on those hand autobahns and acceleration on alpine roads, will settle for a hybrid.Questions 1. Outline the major macroenvironmental factors-demographic, economic, natural, technological, political and cultural-that have affected the introduction and sales of the Toyota Prius. How has Toyota dealt with each of these factors? 2. adjudicate Toyotas marketing strategy so far. What has Toyota done well? How might it improve its strategy? 3. In your opinion, what are the advantages of Toyotas early entry into the hybrid market? What are the disadvantages? Should Toyota have waited- like Ford, GM and Daimler Chrysler? 4. What needs and reasons would drive someone to purchase a green car?