Toyota Prius

john1701a · October 2003

Oops! Pressing the MAP button a second time won't turn off the NAV system; instead, it provides the closest address (down to the house number) you are next to at that exact moment.

To return to the INFO ("Energy" or "Consumption") screen, you have to press the INFO button.

JOHN

funpilot · October 2003

I should be getting my Prius this Friday. It will have almost 300 miles on it because I am swapping it with someone else (he wanted blue, I wanted silver) who lives in Norther Virginia. I live in Southeast Virginia but work in NY metro area, so I will drive it up to NYC on Sunday. I will let you know how it drives. My current drive is an Acura TL.....

jeep2jetta · October 2003

That's interesting and potentially useful. Sometimes when I am looking for an address of a building and the building number is no where to be found, looks like this function (pressing MAP a second time) will tell me if I am in the right place.

xcel · October 2003

Hi All:

___According to Toyota, Hybrids can be cheap as discussed in this article of the same name: www.wired.com/news/autotech/0,2554,60667,00.html

Quote: "The worker is installing the hybrid engine system into the Prius just like a regular gasoline engine," assembly manager Yoshihisa Nagatani says proudly, pointing at the shell of a Prius hanging on an overhead conveyor belt as it follows a Camry.

___Maybe the Camry hanging above the Prius is a higher profit automobile? Maybe the other 3 mass-produced sedans offer a higher profit then the Prius? There definitely is a limited amount of Prius to be built (76,000, 81,000, 100,000, 120,000 possibly?) but I have not heard of a limited amount of other Toyota Sedans for Japans own consumption because of the Prius? I cant tell you the inner workings of what is going on in Toyota City but it sounds like simple economics such as Profits get the cake and loss leaders get the crumbs? I know, that was corny

___RCF8000 gave a blow by blow of the 04 Camry vs. 04 Prius in a head to head from a web site ... Going back to Toyotas mention that Hybrids can be cheap, the biggest factor is not that the Camry is ahead with 7 wins, 2 ties and 1 loss vs. the Prius in those specific characteristics being measured but the fact that you can purchase a Toyota Camry LE for ~ $17,999 any day of the week (except Sundays in my locale) from just about any large Toyota dealer anywhere in the Chicago land area. These loss? leaders include lumbar and height adjustable driver seat, Intermittent wipers, A/C, PW, PL, PM, Tilt, Cruise, AM/FM/CD w/ 6 speakers and all packaged in a truly mid-size automobile with performance supposedly exceeding the Prius in everything except for mileage and emissions (see below on the PZEV based Camry). If they are that inexpensive here, I suspect they can be purchased on the West Coast, East Coast, Southern States, Northern States, and any where else in the states for that approximate price as well. Even the 01-03 Prius was a $19,500 + vehicle at best and the 04 appears to be a $20,500 + automobile at best.

___This is the Achilles heel of the current Prius. What Cheap Hybrid is being discussed or offered? It most certainly isnt the Prius as the Camry is already much cheaper and has a larger size and more comfort with its purchase? They even make PZEV Camrys in Ca. so its not emissions. It gas mileage and the new technology. The driver receives nothing but gas mileage in the process given I dont know if there is a difference between the way the Camry and the Prius drive today. At least I havent heard that the Prius is silent on the hwy nor have I heard the Camry is a herky - jerky driver from those that have done side by sides

___I will have to retract my guesstimates on new model costs from Japan. The Prius was probably very expensive given all the new technologies but apparently, the next generation Corolla might have come at a cost between $250 and $500 million according to the article listed here: http://waw.wardsauto.com/ar/auto_shrinking_time_japanese

___As usual, I will end with this. If Toyota can make the Hybrids inexpensive, place the HSD in the Corolla LE now for $17,500 and sell 250,000 of them this model year. Place the HSD in the 04 Prius and sell 36,000 - 41,000 of them Do one better. Place the HSD in a Camry this year for $20,500. Now see how many will sell!

___Good Luck

___Wayne R. Gerdes
___Waynegerdes@earthlink.net

backy · October 2003

for all of its many virtues. People who want something different than the typical mid-sized sedan will take a look at the Prius, whether because of its fuel economy or versatility or styling or high technology or whatever.

BTW, if we really must compare other cars to the Prius price-wise, we should be a little more fair and equip them a little more comparably. For example, the "stripper" Camrys that go for around $18k in my town have stick shifts, no alloy wheels, no ABS with traction control. And they are '03s (bigger depreciation as you drive off the lot), not '04s like the Prius.

About that "Achilles' Heel" of the Prius... yes, it's got such a huge heel that Toyota is pushing its plant capacity to the limit to meet demand and is considering investing in expanding its HSD plant to enable it to make even more Priuses. I'd love for the products I sell to have a "heel" like that! :-)

rcf8000 · October 2003

I think "what do you think" would include what I think about a Prius vs a Camry. I do think the Camry XLE is more properly compared to the Prius than the LE, but this could be debated. Edmunts says that an XLE can be bought for $21000. Cost considerations appear to favor the Prius, unless you think an LE is equivalent.

mrvadeboncoeur · October 2003

in the Prius vs. Camry comparison in the Consumer
Guide that you mention... what consumer guide
(where can I find it, online or a publication
date/publisher?) and is the comparison of the
classic Prius or the 2004 Prius?

mrvadeboncoeur · October 2003

my understanding is the XLE Camry is made in Japan,
with the majority of the Camrys being made in
North America somewhere...

Check the VIN numbers (first 5 or so digits gives
the location and plant). for the 2004 Prius the
starting digits are: JTDKB

rcf8000 · October 2003

Go to consumerguide.com

kroos · October 2003

Has anyone from the chicago area gotten their 2004 prius yet?

mrvadeboncoeur · October 2003

I'm suspect already. they list the 2003 Prius as
a subcompact and the 2004 Prius as a compact, when
the EPA lists the 2003 as a compact and the 2004
as a midsize...

http://auto.consumerguide.com/auto/new/index.cfm/act/make/divisio- nid/1627
http://www.fueleconomy.gov/feg/noframes/19719.shtml
http://www.fueleconomy.gov/feg/noframes/18608.shtml

Their 2004 review claims that ABS and traction control
are newly standard for the 2004 (was also std. on the classic)
and that the warranties have been newly revised
(yet the timeframe they list for the bumper-to-bumper,
powertrain, and hybrid are correct for both the
classic and 2004 Prius). However, they still list
the free maintenance for the 2004, which is not
still offered on the 2004. (also lists the incorrect
# of free maintenances on the 2003 review...)

as with all reviews, be sure to check your facts.

dave_0471 · October 2003

With so many people clamoring for this car it is no surprise the dealers are smiling at our futile attempts to bargain for discounts of any kind, even processing, advertising and other ridiculous fees. When I asked one dealer about a free service/maintenance plan offered for other models the response was, If you want free service I can smile at you graciously. <insert one-sided laughter here> Dont even ask what happened when I suggested they should credit their 2% holdback fee since the car wouldnt be spending more than 1 day on the lot (Edmunds has a great description of dealer holdback and what it means).

After receiving similar treatment from 3 dealerships I made the following offer to everyone: First dealer to waive all fees (except the destination charge of course) gets my deposit; take it or leave it. Within 12 hours I had a taker and got the deal in writing, along with free maintenance (scheduled service, oil changes and tire rotations) and a loaner car for the first 2 years/24,000 miles.

Whatever the market will bear may be the mantra of our friendly neighborhood Toyota dealers, but it still hurts to see the exorbitant profit margins they garner on the Prius. For my 04 model with package 9 the margin swells to over whopping 13% (factoring in holdback reimbursement to the dealer). Of course if I close my eyes and pretend that the $2k tax credit doesnt exist, I can reason that my out of pocket expense to dealer profit is limited to more a reasonable 4%.

Remember that the tax credit drops to $1500 in 2004 so if you want the car, put down your deposit immediately. When you do so, make sure you get it in writing that the deposit is refundable if you cannot take delivery this year.

Even though this probably reads as a negative buying experience, I went in expecting the responses I received. Most everyone I spoke with was very professional and amicable; they were simply not permitted to budge on any prices/fees for any reason. Regardless, I cannot wait to take delivery next month. Except for the limited rear viewing area I love most everything about the car.

markjenn · October 2003

I hate to open a can of worms, but how would you feel if someone looked at your salary and declared it "exorbitant". Dealers sell low-demand cars at a loss and make it up when they charge more for high-demand cars. It's called a free market.

I do think dealers should be open and honest about fees and not try and sneak them past in the finance-mgr's office. Beyond this, I think they're free to ask whatever price they want and we're free to try and do better elsewhere.

- Mark

dave_0471 · October 2003

Dear markjen 
Respectfully, my comments reflected an honest assessment of my actual buying experience, as requested by other Town Hall members. In that assessment I have provided factual information and figures that I hope will be of use to other prospective buyers.

That said, I completely agree with your opinion that dealers may charge what they will and that the consumer may vote with his or her wallet. Toyota dealerships have every right to their piece of the American way.

As a savvy consumer who appreciates like-minded people, it pleases me to inform people how much money a dealer will make on their purchase. This is not mainstream information and most people dont figure it out for themselves. I believe in well-informed consumers who understand the true value of their purchase, and the loss their Prius takes from the moment they drive off the lot.

Is the Prius worth it? Personally I definitely agree. However, I owe my decision to purchase the Prius to the $2000 tax credit. If it were any less I would have walked away unless I could get the dealer to lower the cost of the car.

Please remember that each sale gives the dealer as much as $2500-3000 profit! All this for about six hours of work (i.e., sales/finance support and dealer prep), and zero overhead cost for storage or periodic cleaning since the car never sits on the lot. It makes one wonder who the tax credit is really benefiting? Ask yourself if there would be as much demand at current prices if the tax credit did not exist.

To markjen, I hope you can respect my opinion as I respect yours. I make no claim that we should presume car dealers are dishonest. My primary concern simply remains with the consumer and not the dealers; especially when they are opposed to any deal. Also, I will not apologize for providing useful information that certain retailers might prefer remain unpublicized.
Best regards,
Dave

markjenn · October 2003

Dave, I completely respect your opinion, but having never run a car dealership, I don't profess to know what is an "adequate profit" and I don't think you do either. Yes, the dealer may make $3K profit on virtually zero incremental overhead for your particular car, but something has to pay for real estate, building, lights, taxes, employee benefits, etc. and these have to be spread out among all the cars that are sold.

Your advice to know what the dealer is paying is sound because it gives you a starting point for negotiation, but I just think you should leave the value judgements (e.g., "exorbitant") out of it. The car's price reflects supply and demand, nothing more and nothing less. Whether the dealer is sending his kids to a community college or to Harvard is none of our business in the same way that what you make in your job is none of my business.

- Mark

john1701a · October 2003

Convincing someone to pay about $300 more for a car that gets 2 MPG less for the sake of PZEV (amazingly clean emissions) is a very difficult task.

Convincing someone to purchase a car with HSD, which not only provides PZEV but also offers a +20 MPG improvement, is an entirely different matter... much easier.

HSD (Hybrid Synergy Drive) is currently available in the 2004 Prius. And I just happen to own one!

Anywho, I filled up the tank yesterday after having driven 420 miles. The calculated result was 49.0 MPG. That's amazing considering the hybrid isn't even broken in yet and that the average driving temperature was only 39F degrees. (Cold causes MPG to drop quite a bit in all vehicle types.) And now, 85 miles later, the Multi-Display show 51.7 MPG (which should calculate to about 50).

I'm quite pleased, so far.

Stay tuned for updates as I continue to add miles and as the temperature drops much lower (I live in Minnesota).

JOHN

dave_0471 · October 2003

Markjenn,
Since you admit that you have little knowledge of the industry I am quite surprised you would gratuitously accuse me of being equally uninformed. In point of fact my knowledge of the industry is considerable. That fact does not change because you say so. I have provided accurate figures that you have not and will not be able to refute logically. Please refrain from writing insults that have no merit because you do not like the facts or my opinions.

I now understand why my use of the word "exhorbitant" bothered you. Perhaps you would have appreciated my "value judgement" if you knew that industry standards consistently show dealers do very well with a 5-7% profit. Some organizations advocate offers as low as 3% over invoice. That said, I definitely feel a near 13% profit is exhorbitant. Regardless I am paying that amount only because of the $2000 tax credit. Perhaps I should have clarified my position earlier.

I am certain the moderator does not appreciate personal attacks on a message board dedicated to facts and opinions on the "value" of the 2004 Toyota Prius.

Since my previous messages have served to identify facts regarding my buying experience and my opinion on its overall value, I consider your line of argument without merit and therefore closed. Please open a seperate forum if you wish to continue this discussion logically without gratuitous assertions.

xcel · October 2003

Hi Backy:

___The 04 Camry LEs being listed for sale here in Chicago come equipped as posted. If you want to go upscale, go a few pages back for the XLE info. As for pushing Prius product, they are up to 41,000 Prius for the US now? They sure are pushing hard ... Toyota produces as many Corollas and Camrys in a month then the entire run of Prius for the year. Something seems to be out of whack is all?

___RCF8000, as for the XLE, not only is it much bigger, faster, and more comfortable, it also includes power adjustable seats, leather, sunroof, etc. as mentioned earlier.

___Dave_0471, if you purchased the Prius because of a Tax credit, you may be in for a surprise while doing your next years taxes. From my understanding, you receive a tax deduction, not a credit from the US government unfortunately. Its worth $2,000 X your tax rate ... I believe Colorado has a credit for state taxes (I am sure there are others) but the US government is a bit more frugal ...

___John1701a, have you bumped up the tire pressures like on the old Prius yet? I found an ~ 2 mpg increase from 32 to 37 and another 1 mpg at 40#s using the GY Integritys myself.

___Good Luck

___Wayne R. Gerdes

wwest · October 2003

"How would you feel if someone looked at your salary and declared it exorbitant?"

The likelihood is that his or her employer does that very thing on a fairly regular basis. The employer, "buyer" of the employee's "goods" never wants to pay an exorbitant price, while most sellers, the employees, would likely be perfectly very content in that realm.

markjenn has the apples and oranges confused.

backy · October 2003

John, is your driving predominantly city or highway, or what mix of the two?

Wayne, maybe you didn't read the articles about the Prius factory that were posted earlier. I thought the one story made it clear that Prius production is gated now on the capacity of the HSD factory, and Toyota is thinking about enlarging it to increase production on the Prius even beyond what they can do by adding a third shift to the auto assembly plant. I guess I just don't see what is "out of whack" about the fact that Toyota has the capacity to make many more Camrys and Corollas--its two most popular car lines--than Priuses. Doesn't Toyota have multiple factories around the world making those cars? I think the production target on the Prius is up to 120,000 worldwide for the first year, per one of those articles. I get this weird feeling that "Wayne R. Gerdes" is a pseudonym for Fox Mulder, and you are looking for a secret plot by Toyota. But that can't be true, right, Fox--er, Wayne? ;-)

fndlyfmrflyr · October 2003

2004 Toyota Prius Certified for Clean-Burning Fuel Deduction

IR-2003-114, Oct. 6, 2003

WASHINGTON  The Internal Revenue Service has certified the 2004 Toyota Prius as being eligible for the clean-burning fuel deduction. The certification means taxpayers who purchase a new hybrid vehicle may claim a tax deduction of up to $2,000 on Form 1040.

Federal tax law allows individuals to claim a deduction for the incremental cost of buying a motor vehicle that is propelled by a clean-burning fuel. By combining an electric motor with a gasoline-powered engine, these hybrid vehicles obtain greater fuel efficiency and produce fewer emissions than similar vehicles powered solely by conventional gasoline-powered engines.

Under current law, the clean-burning fuel deduction will be reduced incrementally until it expires beginning 2007. Purchasers of IRS-certified cars will be able to claim a deduction of $2,000 if the vehicle is placed in service on or before Dec. 31, 2003. The $2,000 maximum deduction will be reduced by 25 percent for vehicles placed into service in 2004, by 50 percent in 2005 and by 75 percent in 2006. No deduction will be allowed for vehicles placed in service after Dec. 31, 2006.

Under the law, the one-time deduction must be taken in the year the vehicle was originally used. The taxpayer must be the original owner. Individuals take this benefit as an adjustment to income on their Form 1040. They do not have to itemize deductions on their tax returns to claim it. To claim the deduction, write clean fuel on Line 33 of the 2003 Form 1040. Also, see the Instructions for Form 1040.

The amount of the deduction for the Prius was set after the manufacturer, Toyota Motor Sales, U.S.A., Inc., documented for the IRS the incremental cost related to the vehicles electric motor and related equipment.

The IRS previously certified the Toyota Prius for model years 2001, 2002 and 2003. The IRS also previously certified the Honda Insight for model years 2000, 2001 and 2002 and the Honda Civic Hybrid for model year 2003.

Related Item: Previous certification announcements.

Subscribe to IRS Newswire

fndlyfmrflyr · October 2003

Some states do have a tax credit for hybrid vehicles.

john1701a · October 2003

> have you bumped up the tire pressures

I'm running 42/40 now.

I did that with fantastic results for the first 18,000 miles on the Goodyears on my 2001 (very similar to what the 2004 comes with). Then I bumped them to 44/42. That made it so you could feel every detail in the road. I liked it that way. The increased awareness is rather helpful when driving on snow & ice.

JOHN

john1701a · October 2003

> John, is your driving predominantly city or highway,
> or what mix of the two?

It's a mix.

My commute favors suburb type driving (up 55 MPH). And on the weekends I open it up on the highways (up to 70 MPH).

Lifetime calculated value for my 2001 Prius after 59,827 miles was 45.4 MPG, with winter lows near 40 and summer highs at 50.

JOHN

xcel · October 2003

Hi Backy:

___The 04 Prius arrives w/ ABS as std. but not traction control. You must purchase Package # 7 or 9 for that. As far as the production line is concerned, then why has everything linked here talk about the production line instead of the where the HSD engines are made? As for the Fox Mulder stuff, you are whacky.

___Good Luck

___Wayne R. Gerdes

john1701a · October 2003

> arrives w/ABS as std. but not traction control
> You must purchase Package # 7 or 9 for that.

You are thinking of the VSC (Vehicle Stability Control) package option.

Traction-Control is standard.

JOHN

dave_0471 · October 2003

Wow! You are absolutely correct fndlyfmrflyr! What I thought was a tax credit is indeed a tax deduction which translates to a return of about $675 instead of $2000. My error resulted from a failure to check up on the dealers who consistently stated it was indeed a tax credit. The fault is mine and I should have known better.

Since I now see that my Prius is going to cost about $1300 more than I previously thought, I must revise my previous statements. I no longer believe the Prius is worth the money.

For those who have read my previous messages, I am putting my money where my mouth is and will get my deposit back today (yes, its fully refundable and specifically written into the contract). Some lucky person on the waiting list will get my car when it arrives in the next couple weeks.

Obviously Im disappointed the $2000 is a deduction and not a credit. Regardless, thank you so much for the correction. This just goes to prove how helpful these message boards truly are!

markjenn · October 2003

Dave, you still don't get the point. I'm not arguing what's a fair profit - I'm arguing that it doesn't matter. It's like arguing whether the price of milk is fair or not. A free market prices things by supply/demand - the value judgment of a fair profit has no bearing. It doesn't influence how much you pay nor does it influence how much you should pay.

I see people constantly using the term "gouging" to describe dealers charging over MSRP. But I never see them willing to describe themselves as gougers by offering less than MSRP. Why is this a one-way street?

In your particular case, I see you are backing out. if you deem the car is not worth the money, you've made a good decision. But if you are backing out of your car deal because you think the dealer is making too much profit, then you're losing out on a car that may be a great value to you, regardless of what the profit margin the dealer is making.

Put another way, let's say you're looking at two cars and the market price of A is $1000 over MSRP and B is $1000 under MSRP. And let's say these market prices work out exactly the same. If you still like A better than B, then you should select A, regardless of the fact that the dealer for A is making an exorbitant $2K more. (This situation happens all the time with Honda dealers who generally have much higher profit margins than, say, Chevy dealers. Should we not buy Hondas because dealers make more?)

What the dealer makes is immaterial! It is valuable data for negotiations to get the best price, but in the final analysis, the market sets the price, not the dealer or the customer. We should always focus on the price - not the discount!

I never intended to insult you throughout this discussion and I don't understand why you are taking it that way. Regardless, I apologize.

Yep, a can of worms. I'll bow out and let John pitch the car.

- Mark

wwest · October 2003

Only with an unlimited supply....

Artificially limiting the supply skews the market price.

talleyid · October 2003

I don't know how accurate this is but I've been having extended discussion with a St. Louis dealer that I've had excellent service/pricing from when purchasing other manufacturer's cars, they carry several lines at multiple dealerships in St. Louis.

He said Toyota was strictly controlling pricing on the Prius. They state that it costs them $25,000 to manufacture every Prius before options so they're actually taking a slight loss on each vehicle. The intention, he stated, was to build the market for a technology they're committed to and increase demand for the other 5 lines that are going hybrid over the next five years (Highlander, Tundra, Corolla, Camry, etc.). Sorry I don't remember the other models or sequence exactly.

daysailer · October 2003

But are you suggesting that Prius production is "artificially" limited? And just what is meant by artificial? In as much as Toyota and Honda had to subsidize the price of the hybrids to bring them to market in the first place, it was the PRICE that was "artificially" limited. Even if they have now exceeded the break even price/cost, they surely won't produce more than they expect to sell at that price, even if they can. Automakers are not charitable organizations, nor should they be. There's nothing "artificial" about that.

wwest · October 2003

How are we to know what the price would be if there WAS an unlimited supply? For instance, I didn't even attempt to buy one until the 03 came into over-supply....

I have a habit of walking away when I see that dealer "local market price adjustment" of $5000.

beach15 · October 2003

...this morning I was parking my Cadillac in the school parking lot, and when I looked up, a relatively dirty maroon colored 2004 Prius was pulling in. This is the new model, mind you, and it was a student here at school. I'm not sure where or when they bought it, but it really looked kind of cool, especially the beige interior.

Kind of weird that I've already seen this car, considering we leave in the second smallest state, Delaware. There isn't even any dealer close to here, except for about 45 minutes away. Should these cars already be out?

daysailer · October 2003

unless Toyota screws up big-time. Manufacturers do not intentionally produce more than they can sell at a profit.

If dealers can sell with a "local market adjustment" of $5K, either the product is a heck of a bargain @MSRP, or there are a lot of locals with more money than sense.

wwest · October 2003

Personally, I'd much rather sell 50,000 units at 10% than 30,000 units at 13% margin.

xcel · October 2003

Hi John1701a:

___Thanks for the pointer. I stand corrected.

___Dave_0471, I dont know if this will help you but someone posted into a thread over at priusonline that Pa. residents receive 20% of the retail cost of a Hybrid automobile as a CREDIT on that states income tax. I believe Colorado as already mentioned offers a similar deal although maybe not that good. In any case, an 04 Prius for ~ $16,500 - $17,000 w/ rear wiper and side airbags would be a steal! That is if you live in Pa. or Co. I dont know how factual the above is but you may just want to look into it in case the state you reside in has something similar. I wish Illinois did

___Wwest, for the sake of our country, I would rather see Toyota sell 250,000 or more Hybrids at 2% profit ...

___Good Luck

___Wayne R. Gerdes

mrvadeboncoeur · October 2003

last I heard, PA had a GRANT program, not a credit.
you had to file the paperwork BEFORE you took delivery,
and had to provide MPG info to the state, to get your
grant. depending on the application program run,
it was as much as $2000 (IIRC), but to qualify
depended if the program was funded for that particular
run. (some areas of TX do the same, but have yet
to receive funding...)

CO does a state tax credit on income taxes.
ME, MD, and NY don't collect (or as much of) the
state sales tax.
I'm not sure which form of tax credit OR does.
I still haven't figured out if the Prius qualifies for
the credit in RI.

Many states will allow you to take the federal
deduction on your state taxes. There's a line item
for this in the MA state income taxes. some other
states just use the amount off of the federal form.
some states don't have a place for you to take the
deduction at all.

then, if you live in VA and get the special fuels
license plate, you can drive solo in the HOV lanes
in that state. (only state to allow it (because
of federal highway funding reasons) but soon it'll
be phased out unless legislation passes...)

backy · October 2003

He said Toyota was strictly controlling pricing on the Prius.

He probably meant, "This dealership is strictly controlling pricing on the Prius." If you will check the Legal Disclaimer on the price of the '04 Prius at toyotausa.com, it starts off with "2004 Manufacturer's Suggested Retail Price, including the Delivery, Processing and Handling Fee." Later on, it says, "Actual dealer price may vary." And in fact, it does. The Toyota dealer I talked to about ordering a Prius offered me a $500 discount off MSRP. If Toyota were strictly controlling pricing on the Prius, how could the dealer get away with that?

They state that it costs them $25,000 to manufacture every Prius before options so they're actually taking a slight loss on each vehicle.

I'd ask the salesperson who "they" are. Toyota was making a profit on the '03 Prius. If it costs them $25,000 to make each car, before options, they would actually be taking a huge loss on each car ($19,995 before fees, plus figure in some dealer profit (Edmunds.com says invoice is $18,411 with no options). That's a loss of $6500 per car! I can understand that Toyota has not yet recouped their investment in the development of the new Prius, but to say they are losing $6500 per car is ridiculous. You could say something similar about every new car model or redesign early on in the product cycle, until the manufacturer has recouped their investment. The main thing is, what will be Toyota's profit or loss at the end of the run for the 2nd-gen Prius?

wwest · October 2003

Given the number of vehicles Toyota sells worldwide a loss of $6500 on each Prius might be a damn good investment.

And then there is the manufacturer's fleet average fuel economy issue to consider also.

backy · October 2003

Maybe, except Toyota already made that investment in the Gen One Prius, and by the end of its run they were turning a profit on each car. Given that, why would Toyota design a Gen Two car that they plan to sell in much higher numbers than the Gen One model and take a $6500 loss on each unit? It just isn't logical, or smart--and I respect Toyota as being a very smart company.

Re fleet average... with the ECHO, Corolla, Camry, and RAV4 in their stable and selling in large quantities combined (esp. compared against the Prius' numbers), I don't see the fleet average argument.

dave_0471 · October 2003

It turns out that the Virginia Department of Taxation provides a tax credit (definitely a credit and not a deduction) equal to 10% of the federal tax deduction. Therefore a Virginia buyer such as myself could expect about $675 back from the $2k Federal tax deduction, plus another $200 for the Virginia state tax credit.

What I initially thought would cost about $25,000 (I was already on the fence at this price) is really over $26,000 after recouping the deduction and state credit. This is the reason I am getting my deposit back. The decision has always been based on my opinion of the Prius' value. I simply dont think it is worth that much money.

On another note, I must respectfully correct a statement that tallyid referred to in msg #977. The dealer in question was "mistaken" (must remain politically correct. heh heh) if he suggested the 2004 Prius is being sold at a loss.

Back in 2000, when the 1st generation model came out, the statement would have been true. Of course this was due to far greater manufacturing costs. Production for the 1st generation Prius started at an exclusive plant with higher costs and less efficient build processes. Prior to last years model they moved to a second plant with a somewhat improved build process but retained many of the same problems. For the 2004 model, Toyota has completely relocated Prius manufacturing to a mass-production site shared by four other high output sedans. This change resulted in dramatically improved build processes, higher output levels and lower costs per unit. Consequently, Toyota is able to make a profit while keeping the MSRP identical to the 1st generation model. The only hybrid currently manufactured at a loss is the new Ford Escape.

In support of these facts, I submit the following statements. The Prius Chief Engineer (Masao Inoue) stated this year; Toyota has largely recovered its initial long-term investment in the first-generation Prius. In another quote, Dave Hermance, executive engineer, Regulatory Affairs, Toyota Technical Center, U.S.A. has stated: The product is profitable. (note: The quotes in this paragraph were obtained from an article by Gary Vasilash).

I hope this information is of use.
Best regards,
Dave

orangelebaron · October 2003

I finally sat in the 04 and discovered that Toyota's habit of making the steering wheel too far away from a driver who has the seat most of the way back has made it's way into this car as well. I noticed most other small Toyotas have this shortcoming. Toyota should offer a telescoping feature.

fndlyfmrflyr · October 2003

Some states do have large credits. It is a shame VA isn't one.

I agree with you that it will take a long time to break even just on fuel savings. I feel depreciation is uncertain because of the batteries and the cost to replace them when needed.

In my case it would take about about 100,000 miles before I would break even (at the nearly $2 per gallon gasoline costs around here) on fuel savings alone. The two cars window for about the same price, but the other car has $5000 discounts available (and poor resale value).

I tend to keep cars a long time so resale is not a factor, but the cost to replace the batteries then becomes a major consideration.

I like the 2004 Prius a lot

townha11 · October 2003

I had a chance to drive the 04 Prius yesterday. While it's a good car and I'd buy one for the right price I do have a couple of observations. First, something positive: I really like the "see through" rear bottom section of the hatch. Wow, it really makes a huge difference in seeing what's behind the car. (It made me wonder if the Pontiac Aztec's see-through panel was as good. I hope so.)

There's much to like about the car, but I was disappointed in one or two areas. For one thing, my left leg was higher up on the left side bolster of the driver's seat than I would have wanted. I found it extremely uncomfortable, as uncomfortable as another new car seat I've been in recently, the VW Toureg. So thumbs down on the driver's seat.

I was also disappointed in the car's braking, which felt odd. At one point - possibly running on battery; the traffic was too noisy to tell - the car actually seemed to accelerate slightly before braking. Almost the same sensation as when in a regular car the air conditioner is running - it seems to add a slight additional momentum to the vehicle. Perhaps one can get used to this, but I found it disconcerting. I really expected the car to be all positive, with no trade offs. I was wrong.

Finally, the navigation console, the unusual method of starting the car, and the strange gear shifting and park procedure struck me as unnecessarily "different." In short, the car may represent a quantum leap in technology, but I think it's far from a quantum leap in drivability.

backy · October 2003

I've noticed the steering wheel position problem on the Corolla, but not the other small Toyotas--ECHO, Camry (is that "small"?) and now the Prius. The Prius' wheel position was just about perfect for me, but then I'm only 5'9" and have the driver's seat forward a few notches. I can see how a taller driver or one with shorter arms would have trouble. I agree cars like the Prius should have a telescoping wheel standard; they're creeping into other cars in this price range, e.g. Mazda6.

xcel · October 2003

Hi Dave_0471:

___As has been pointed out more then once; profit can mean different things to different people. It is one thing to say you have an automobile being mass-produced with all the associated cost savings of the process and are make a profit on the process. It is another thing entirely to say you are making a profit and have recouped your investment. I am not entirely positive of the numbers I have posted in the past because only Toyota would know exactly what they are but IF it cost 2 billion dollars to design the first and second generation Prius, how does 125,000 first generation automobiles and now possibly 20,000 second generation automobiles pay off the design and manufacturing costs? We are talking about almost $14,000 per automobile just in design and the payback has been amortized over an 8 year time span. No way do the numbers add up? That is unless the design costs were possibly funded by MITI or some other Japanese Government sponsored organization?

___As far as other Hybrids manufactured at a loss, the Escape isnt available to the public and neither is the RX400H. The Honda Insight is available but is awash in red ink on every vehicle sold. I cannot say the same for the Civic Hybrid as it probably isnt given how close to std. Civic it was derived. In fact, the HCH is probably the least expensive to design and manufacture given the similarities to the current Civic Lineup and I could easily understand that particular vehicle being immediately profitable given the similarities and the low powered electrics included with it.

___Orangelebaron and Townha11, nice first hand discussions.

___The seating position is not entirely setup properly in the Corolla either whereas the Camry fits like a glove IMHO. Fortunately, the Corolla has adjustable seats that make it comfortable for me but not enough for many that have commented on it. Either a Telescoping wheel or the wheel itself being placed farther from the dash would cure this problem post haste in the Echo/Corolla/Prius.

___Since I didnt see either of you mention the acceleration, it must have been seamless or at least more then adequate which would be a positive in this generation Prius over the previous one or any other automobile you may have/still are driving currently.

___And as far as the new fangled way of initiating the cars startup and movement is concerned, it make me wince just thinking about it ...

___Good Luck

___Wayne R. Gerdes

townha11 · October 2003

Before seeing my first Prius I had done a lot of reading about it and, just as with many folks posting to this forum, I was dying to get a look at one. After seeing a prototype up close at an auto show I was even more excited about the car, and when I finally got to sit in one on a dealer's lot I was head over heels in love with it.

However, having driven it I can say that I've now come down to earth again. I realize that it was impossible for the car to have lived up to the unreasonable expectations I had for it. The car is beautifully styled, and those MPG numbers will make your head spin, but it's still just a car. I'd really recommend everyone who's smitten by it to have a test drive if at all possible. That way you're impressions and opinions will be grounded in reality. It's a great car, but not the only one.

mdmetz · October 2003

W/R/T Virginia's tax credits: The tax advantages of purchasing a Prius or other hybrid here may not be as generous as those of other states, but the value of driving in the HOV lanes is incalculable for residents of Hampton Roads and Northern Virginia (the two areas of the state with HOV restrictions) whose commutes would benefit from using them. Right now I can't afford a new Prius anyway (and am not sure if I would choose one if I could, for various reasons, most of which revolve around my perception that Toyota has done a good job at producing a very clean, very efficient, well, Toyota, whose driving experience would likely be somewhat too bland for my twenty-five grand); given car-buying preferences here in Hampton Roads and the fact that the 2003 Prius was offered at invoice plus a $399 "processing fee" by the middle of the last model year, I would expect it to be discounted somewhat locally by the end of the year anyway, unless Priuses are approved for California's HOV lanes and the entire U.S. allocation gets sucked up by traffic-frazzled Angelenos. If the provision allowing HOV use in Virginia here is extended for another two years and saves a driver twenty minutes each way to and from work (easy to do in Northern Virginia, and not impossible on many commutes down here), then that driver has realized a substantial benefit, albeit one on which only he can really place a price.

W/R/T the cost of developing the Prius: The $1 billion - $2 billion cost of developing a completely new car is for developing a platform from the ground up, perhaps reusing engines but with entirely new frames, suspensions and the like. The original Prius was built on a platform shared with the Echo, Yaris, Vitz, Scion xA and Scion xB, if I'm not mistaken; and the continued presence of a torsion beam axle in the back leads me to believe that the 2004 Prius rides on a heavily reengineered version of the same platform, rather than on entirely new underpinnings. I don't know this for sure, but if it's true, it would substantially reduce the cost of developing the new Prius from that $1 billion figure. Motive power, even the complex and advanced system in the new Prius, is far from being the only expense involved in automotive development.

dave_0471 · October 2003

I completely agree that the ability to use HOV lanes in the Washington DC area is invaluable. Unfortunately, the HOV provision is currently set to expire in mid-2004. It is possible that this expiration date will be extended and the decision is currently before the legislature. The problem is that our HOV lanes are already becoming saturated and a key topic in local political races is whether or not to have HOV users pay a toll. I just got a phone call yesterday, from a representative of a political candidate, asking my opinion on that very question. Of course I strongly oppose the measure.

After 3 years of selling the Prius, dealers must surely know this. However many seem to be playing dumb. On two recent occasions dealers insisted the expiration date had already been extended to 2005, but when I confronted their evidence they admited they might have been misinformed and would speak to their manager. Don't believe the hype people. Your HOV privaledges are likely to dissapear this coming July. Enjoy it while you can.

The Virginia Department of Transportation Reports the following information on their website:

There is no guarantee that HOV exemptions for inherently low-emission vehicles or hybrids will continue. Exemptions to rules pertaining to travel on HOV lanes are being scrutinized, and as more ILEVs and hybrids enter the HOV lanes, there becomes an increased need to examine their exempt status.

The HOV Task Force Report released in August made this recommendation: "Do not extend the exemption for vehicles with clean special fuel license plates set to expire on July 1, 2006." The Federal Highway Administration has advised Virginia that its exemption for hybrid vehicles is in violation of current Federal statute, but Congress is considering legislation that would permit states to allow hybrid vehicles to use HOV lanes. There may have more information soon as various hybrid/HOV bills wind their way through Congress.

dave_0471 · October 2003

Wayne,
Your observation about the massive amount of R&D spending by Toyota is a good one. Please bear with me and I will provide a full explaination for you.

First of all, when you read about the amount of money spent on R&D for a new technology, such as Toyota's hybrid drive system, I can see how you might be confused when the Toyota executives make statements like, "Toyota has largely recovered its initial long-term investment in the first-generation Prius."

In any macro-economic model, especially one in the automobile industry, your question as to how Prius sales would recoup the 2 billion plus spent on research is considered an apples to oranges comparison. In other words, profit return on R&D for new technology falls into a related but completely separate economic model than that for the profit return on the products derived from that technology. Let me explain.

The billions spent on research for hybrid technology was a gamble by Toyota to establish themselves at the forefront of a new drive system that would one day become mainstream. I think most readers would agree their gamble is going to pay off insofar as they have the most efficient and powerful system to date.

In general terms, Toyota's plan to get back their R&D investment is as follows. First, they wanted to establish a patented technology that would far surpass similar research efforts by their competetors. So far they have met this goal. Now they want to do two things. First, they want to dominate the hybrid market by providing the greatest selection and quality across their production line. As you know, Toyota/Lexus already plans to release hybrid versions of at least 4 other models besides the Prius. Their second objective and most lucrative strategy is to license their superior hybrid technology to competitors. Nissan is an example of one manufacturer that is already signing on. These licensing fees will return a profit to Toyota on every one of those vehicles sold with their patented hybrid system. It is these licensing fees that will mean billions to Toyota in the future, above and beyond their profits from their own line of vehicles.

Manufacturer profit is determined by a much simpler economic model. Take the cost of production, advertising, invoice finance support, dealer holdback return, customer incentives and distribution (there are some other unmentioned costs of course). Then subtract this figure from the invoice cost and other fees paid by dealers and you get the profit referred to by the Toyota executives. As you correctly stated, this profit is comparably small to the R&D money spent if you just consider a single line of cars like the Prius. I'm sure you can now see why that profit is tabulated in a seperate economic model for Toyota from the R&D model.

I have done my best to shed light on this confusing issue. I hope it helps.

On another note, you are indeed correct about the 2004 Ford Escape hybrid not being sold just yet, but Ford did indeed announce they will be selling the car at a loss. I was not aware that the Honda Insight was still selling at a loss. Thanks for the clarification.
Dave

Toyota Prius

Comments

Helpful Tools

Most popular vehicles