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Could Toyota’s Hybrid Technology Be Its European Ticket?

Could Toyota’s Hybrid Technology Be Its European Ticket?

“It is rare a flopped product or technology gets a 2nd lease of life. But just such a 2nd lead life, at least here in Europe, is now in prospect for cars featuring Toyota-pioneered (gasoline) electric hybrid technology”

Toyota is using its previously shunned hybrid technology experience to exploit the end of Europe’s love affair with diesel engines and is making big sales gains, from a lowly base.

The trouble is, this technology is very expensive, and so far this year Toyota Europe’s sales gains have led to much red ink.

Toyota, one of the world’s biggest car manufacturers in terms of sales, has regularly performed poorly in Europe. Its market share in Western Europe was a paltry 4.4% in the first five months of 2017, way below Germany’s Volkswagen at close to 25%, Peugeot’s 10.4%, and Renault’s 9.7%. Even BMW, at 6.6%, sells more of its pricey cars than Toyota.

But Toyota’s anaemic-looking 4.4% share hides a huge acceleration in its sales. In the same period last year, Toyota captured only 3.9% of the market. Toyota sold 19.2% more cars in the latest period at 280,750, according to industry newsletter Automotive Industry Data. The overall market rose close to 5%.

AID Editor Peter Schmidt said until recently Toyota’s hugely impressive gasoline-electric hybrid technology had flopped on sales charts.

But diesel’s implosion might change all that

In Europe, the obvious choice to save fuel has been diesel, and it accounted for more than half of new car sales. Thanks to the echoes from dieselgate, where VW cheated U.S. diesel emissions regulations, and a growing awareness of the fuel’s dangers, sales are on the slide. 

Sales of diesel powered cars and SUVs were as high as 55.7% of Western European vehicle sales in 2011, have been around 50% since then, but are now showing signs of great fragility, with some experts saying by 2025 market share could collapse to about 15%.

In the U.S. diesel sales are small at close to 2%.

Politicians across Europe, including London, Paris and Berlin, Stuttgart and Munich, have been talking about banning all diesels from city centres and withdrawing tax incentives.

The Center for Automotive Research (CAR) at the University of Duisburg-Essen has said diesel market share in Germany could slip below 40% this year, from close to 47% in 2016, drop to close to 20% by 2020, and on down to 15% in 2025. In Western Europe, CAR reckons diesel share will be a little better, possibly hitting 30% in 2020 but also hitting about 15% in 2025.

“It is rare that a flopped product or technology is offered a second lease of life. But just such a second lead life, at least here in Europe, is now in prospect for cars featuring Toyota-pioneered (gasoline) electric hybrid technology,” Schmidt said.

“In Europe, Prius-type hybrids never managed to rise above wallflower status. That’s chiefly because the fuel-sipper role was admirably served by diesels. However with diesels now well on the way out, what are the realistic alternatives to meeting the E.U’s (fuel efficiency) rules,” Schmidt said.

Schmidt said Europe’s car makers will have to achieve the higher fuel efficiency standards without diesel, but battery electric and plug-in hybrids are either too expensive, or range-threatened and the recharging network isn’t up to it.

“So how about Prius-type electric hybrids as an interim solution to continue the cast in stone year-on year reductions of CO2,” Schmidt said.

Traditional Prius
The traditional Prius hybrid has a very short electric-only range, but uses the battery to augment the gasoline engine which is recharged on the move, not separately like a plug-in hybrid

Schmidt said Toyota’s rivals are watching developments carefully, and Korea’s Kia and Hyundai have already launched Prius-type hybrids.

But Toyotas success is coming at a large financial cost.

“Toyota’s hybrids, because of their added technological sophistication, such as the extra battery pack and E-motor, are simply more expensive to produce. For Toyota the good news is that its sales are gaining in Western Europe. The not so good news is that one of the world’s most profitable carmakers has lost some 526 million euros ($587 million) from its first quarter car business in Europe. That translates into an eye-watering €2,200 ($2,454) loss for every car it sold in Europe in the first quarter and probably a great deal more for every one of its discounted hybrids,” Schmidt said.

In Europe, Toyota offers hybrid versions of its little Yaris, Auris family car, the Rav4 SUV and of course the Prius.

According to AID, last year Toyota sold about 530,000 cars in Western Europe and 41.5% were hybrids. The previous year, 30.4% of its 500,000 sales were hybrids.


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