From: Matt Nauman, San Jose Mercury News, Calif.
Published January 12, 2005 12:00 AM

Hybrid Car Production Questions Abound for Toyota

Jan. 12—DETROIT — Toyota will make enough Prius hybrid cars this year to catch up to customer demand, and it'll


decide by mid-year which hybrid model it will produce in the United States.





Then, said Toyota President Fujio Cho in an interview Tuesday, the company will decide when and where to start making them.


Speculation about which U.S. plant will make hybrids includes NUMMI in Fremont.





"Not just economic and technology factors but also strategic factors will be considered," said Cho through a translator.





Gov. Arnold Schwarzenegger, on a recent trip to Japan, pushed for hybrid production in California. It costs Toyota more to


build cars and trucks at New United Motor Manufacturing, Inc., than at other U.S. plants, and NUMMI is an older facility with


traffic issues and not much room to grow. But it would be a symbolic and politically powerful message to build high-mileage


gas-electric vehicles there.





Prius sales reached 53,991 in 2004, more than double the 24,627 that were sold by U.S. Toyota dealers in 2003. Still, waiting


lists stretch six months or more. So, Toyota has said it will increase production of the Japan-built Prius and double U.S.


shipments to 100,000 units in 2005.





"In 2005, we are able to eliminate all the back orders," Cho said.





The company will start selling its second and third hybrids later this year — the Lexus RX 400h in March and the


Highlander Hybrid in June. Both are SUVs. Company insiders have expressed concern that it might just replace customer


frustration with the long wait for a Prius with similar feelings by those waiting for a RX 400h or Highlander Hybrid. About


100,000 people have told the company they're interested in the Highlander. That's a huge number of "hand raisers," in


industry parlance.





On Tuesday, during a brief visit to the North American International Auto Show, Cho said hybrids are vital to Toyota.





"We believe hybrids will continue to be the core technology of the future," he said.





Even if hydrogen fuel-cells develop over the next 10 to 20 years and eventually replace gas-burning internal combustion


engines as the primary source of the world's propulsion, as some believe, hybrids will still have a role.





Besides adding hybrid production to an existing Toyota plant in North America, the other big question over Toyota's head is


whether it'll add yet another plant here. Its new truck plant opens in Texas in 2006, and not until Toyota sees how well its


products are received will it think about adding more production here.





"I think it is too early for us to make a decision," Cho said. But, in a comment sure to please state governors, "no state is


excluded from our consideration," he said.





Cho's Detroit visit comes just as the share of the U.S. auto market held by the traditional Big Three fell to 58.7 percent in


2004, an all-time low. Asian automakers, topped by Toyota, now control 31 percent of the American market.





Toyota, including its Lexus and Scion dealerships, sold a record 2,060,049 new cars and trucks in 2004. Still, Cho said, he's


not worried about a return of trade sanctions — "afflictions" as he called them — since Toyota makes many more


vehicles in North America than 10 or 15 years ago.





Toyota made more than 1.4 million vehicles, or 70 percent of what it sold in the United States, in plants in the United


States, Canada and Mexico last year.





In the future, Cho said, Toyota will "add more jobs for American people. We have to make a further effort to become a true


American company."





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© 2005, San Jose Mercury News, Calif. Distributed by Knight Ridder/Tribune Business News.


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