Company to increase hybrid output, cut vehicle’s cost

Tuesday, Sept. 13, 2005 | 9:48 a.m.

Toyota Motor Corp., the world's largest seller of gasoline-electric autos, plans to produce as many as 400,000 hybrids next year, at least 33 percent more than its 2005 goal, while trying to lower the vehicles' cost, the company's president said.

"That's the level we may be able to barely reach, stretching our capacity," President Katsuaki Watanabe told analysts and investors at a conference in New York Monday. "Through those means of stretching our activities, we may be able to reach 400,000."

Fujio Cho, Watanabe's predecessor, previously targeted sales of 300,000 hybrids worldwide by the end of 2005, and last year he pushed back the date to 2006. Toyota U.S. sales chief Jim Press said a shortage of batteries and other parts will probably contribute to the shortfall. The company is planning to sell 240,000 to 250,000 units by the end of 2005.

Surging demand for the models in the U.S., which buys about 60 percent of gasoline-electric autos, amid record high gasoline prices has led Toyota to expect to sell a million such vehicles annually by the end of the decade. Gasoline prices in the U.S. averaged a record $3.057 a gallon on Sept. 2, according to AAA, the largest motoring organization in the country.

The Toyota City, Japan-based company, the world's second- biggest automaker, has sold 93,957 hybrids this year through August in the U.S., three times the number it sold in the first eight months of 2004. That's helped raise its overall U.S. sales, which have increased 11 percent to 1.54 million so far this year.

Expensive Parts

Hybrids combine a gasoline engine, electric motor and a battery pack that's recharged through braking. Electricity powers the vehicle at low speeds, reducing gasoline usage. The cost of those components makes hybrids $3,000 to $5,000 more expensive than conventional gasoline engine autos, according to automakers and analysts.

Toyota is working to offset that gap as quickly as possible by finding ways to make batteries, electric motors and other parts more cheaply, Watanabe said.

"At the earliest possible stage I want to reduce to one half of the current level" the costs of the parts, Watanabe said. "I can't cite timeframe."

Press declined to estimate how many of the 400,000 hybrids the company plans to make would be purchased in the U.S.

Toyota's U.S. sales unit is based in Torrance, California. The company's American depositary receipts fell 4 cents to $85.11 in New York Stock Exchange composite trading at 4:18 p.m.

--With reporting from Kae Inoue in Tokyo. Editor: Nol, Espina.

To contact the reporter on this story: Alan Ohnsman in New York at (1)(323) 559-1067 or aohnsmanbloomberg.net

To contact the editor responsible for this story: Dave Versical at (1)(248) 827-2944 or dversicalbloomberg.net

-0- Sep/13/2005 2:06 GMT