Hybrid Cars Are Red Hot in Japan

Japanese carmakers are widely recognized as leading exporters of hybrid cars to the United States. But their key strategic advantage may become their ability to sell hybrid gas-electric vehicles to Japanese consumers.

2010 Honda Insight

The new Honda Insight was Japan’s best selling car in April. When the 2010 Toyota Prius is introduced this month, hybrid sales volume could approach the size of the US market.

In April, Honda sold 10,481 units of the new Honda Insight in Japan—double its monthly sales target—marking the first time a hybrid was Japan’s monthly bestseller, not including minicars. Toyota plans to sell 10,000 Priuses per month in Japan, beginning this month when it introduces the third-generation model. According to incoming President Akio Toyoda, Toyota already has more than 80,000 orders for the Toyota Prius. Toyota sales orders are up by about 20 percent in Japan, with half coming from the new Prius, according to Yoichiro Ichimaru, a senior managing director at Toyota.

These numbers suggest that Japan’s hybrid market is quickly catching up to the American market in terms of size, despite that the fact that Japan’s overall vehicle market is less than half the size of the American market. In 2007, five times as many hybrid gas-electric cars were sold in the United States than in Japan. In 2008, the ratio of US to Japanese hybrid sales was closer to three-fold. Given the fierce battle between the new Honda Insight and the new Toyota Prius for domestic sales, Japan will gain even more ground this year.

The ascendancy of hybrids in Japan and throughout the world will test the commitment of all global automakers and governments aiming to produce more efficient and less polluting cars. While the US government debates various green car incentives—or offers credits for vehicles that won’t be on sale for at least a couple of years—Japan plans to spend about $4 billion this year in government subsidies to spur slowing auto sales and push consumers in a greener direction. More importantly, hefty gas taxes mean that Japanese gas prices are about twice the price at the pump in the US. High gas prices historically are the single biggest factor leading consumers to choose smaller efficient cars.

As the battle intensifies between the Toyota Prius and Honda Insight for Japanese customers, both companies are increasing their commitment to producing more hybrid models and thereby reducing costs with economies of scale. This is creating a solid base of support for expansion of the hybrid market into other global markets—a trend that should be of great concern for those hoping that US automakers will regain their footing, and start to lead the world in production of the next generation of fuel-efficient cars.

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  • Charles

    I have thought that one of the main reasons that Toyota, Honda and other Japanese automakers made the correct decision to continue to build small and fuel efficient vehicles while the US’s Big 3 when the truck/SUV route is because of the Japanese home market. To remain competitive in their protected home market, the Japanese had to stay competitive in small and mid-size cars. When gas prices in the US made the US market look like the Japanese market, the Japanese were ready with the correct vehicles.

  • Max Reid

    Since the competition between Insight & Prius has made both hybrids affordable, more people are rushing to buy it.

    Expect the same in USA as well. Its awesome that Insight was the best seller for last month.

    I wish Ford also launches a small Hybrid Hatchback.

  • sean t

    This will put more pressure on the pricing of GM Volt, if it can be on the market.

  • Loving It

    Love gas conservation
    Love reduced pollutions
    Love the continued progress
    Love the competition

    Obama is about to announce mandates to increase in car efficiency and reduce air pollution. The only thing I’d like to see is the timing moving sooner than 2016.

    While I see some people still don’t get it (going back to SUV’s while high fuel prices take a winter break), let’s hope mankind has finally see the light and ready to support the combination of environmental and economic sustainability.

  • Vcorcl

    I heard from NBR today that the new 2010 Prius has 59 mpg and is $3k cheaper. I luv the competition 🙂 Hope it will bring down the price on Fusion hybrid too. I need a sedan that can fit three car seats.

  • Nelson Lu

    Ford may do better than a “small hybrid hatchback.” The Ford Focus should be available as an electric vehicle next year, and depending on its eventual range and your commute, it may make a lot more sense than both the Prius and the Insight.

  • Raven Symone

    the car is hot i’m going to get one right now later

  • fred smilek

    As soon as I have some $$$$ I am going to buy one this car. I just love the idea of doing something good for our planet. 🙂

  • Jeff T

    OK, I wish Honda wouldn’t have scrapped the CRZ. They say the stopped production because of the economic downturn. But, a car like that could have helped turn things around. Anyway, if anybody is listening … bring back the CRZ for 2010. It will do well.

  • grant

    Official release and sales of the Prius started on May 18th. Within the first week a grand total of over 110,000 cars were sold. An unprecedented phenomenon.

    I pre-ordered mine on March 31st 2009, will be receiving it on June 20th. If I had ordered one now, I wouldn’t be getting my hands on one within the year.

    Furthermore, there was a great incentive for us because Toyota lowered prices and on top of that there were significant tax cuts for low-emission vehicle buyers.

    Good Luck 🙂

  • grant

    The Comment above is from JAPAN!! I don’t know why it was omitted. Cheers, grant 🙂

  • odelia

    Waw what a technology i saw some at the cop 10 cbd conference in Japan nagoya, they are beautiful