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Honda Insight selling well, sparking hot sales battle with Toyota over hybrid cars

3, 17. 2009

   The Honda Insight is selling rather well while new car sales in general are going down amid the economic slowdown. Due in part to the setting of the base price at low levels starting at 1.89 million yen, orders were received for 15,000 units of the Insight model cars in February 2009, the month when the cars were put on the market. The figure is three times the monthly target sales. Going ahead in terms of good mileage, in the meantime, is the Prius of Toyota Motor Corp. The new model of Prius was introduced in May, and the hybrid version of the luxury Lexus model is also to come out this summer. The sales battle over hybrid cars is likely to become severer toward the summer.

15,000 orders placed for Insight, three times the monthly target

Honda Insight.  Base price starts at 1.89 million yen
Honda Insight. Base price starts at 1.89 million yen

   According to the Japan Automobile Dealers Association, the new car registration in February went down 32.4% on year to 218,212 units. Against this downward trend, the Insight cars sold since February 2009 by Honda Motor Co. alone seemed to show a little different picture.

   The person in charge of the public relations at Honda joyfully said:

"We received orders for 15,000 units, three times the monthly target."

   The monthly sale of the Fit, which is said to be selling well, is about 8,000 to 10,000 units. The Insight was thus sold by far better than the Fit, running counter to the current trend that car sales are sluggish in the face of the current economic slowdown. The Honda dealers are crowded with customers even now.

   An ordinary car is powered by a gasoline engine. A hybrid car runs by both a gasoline engines and an electric motor.

   In case of the Insight, it mainly runs on the gasoline engine supported by the electric motor in starting. It uses the electric motor when it runs at a low speed, and only the gasoline engine at a high speed. Depending on how it runs, the Insight usually goes 30 kilometers per a liter of gasoline, while ordinary cars run 15 to 20 kilometers per a liter of gasoline.

   Since the amount of gasoline used by the Insight is not much, it is friendly not only to the environment but also to the purse. Gasoline prices began rising in around March 2008, and when the prices reached the peak of 180 yen per liter there were an increased number of people who were considering switching their cars to hybrid cars.

   The hybrid cars give good mileage, but the bottle neck about them is that their base prices are high. The lowest base price for the Honda Civic Hybrid is 2,289,000 yen, while the Toyota Prius, which is highly valued as hybrid cars, are priced at 2,231,000 yen or higher. The hybrid cars are hundreds of thousand yen to 1 million yen more expensive than ordinary cars of their counterpart classes.

   Honda took advantage of the high prices for hybrid cars and set the lowest base price of the Insight at 1.89 million yen. What made it possible to lower the price was the rigorous effort to cut down on the cost.

   The person in charge of the public relations said that the cost cutting effort started with making of the hybrid system used by the Insight, IMA (integrated motor assist), smaller and lighter than the old system. Especially, a cost cutting of as much as 50% or so was successfully achieved by reducing the number of component parts of the battery box, he said. Furthermore, he said, some of the parts of the Fit were used for the production of the Insight. A mass production of about 200,000 units of the Insight across the world also helped cut the cost, he said.

New models of Prius, Lexus coming out in May

   While Honda succeeded in lowering the price, Toyota is concentrating its effort on achieving better mileage for its Prius. The mileage of the Insight is 30 kilometers per a liter of gasoline, but that of the Prius is declared to be 35.5 kilometers per liter.

   Honda's Insight uses both the engine and motor at starting, but Prius start running mainly with motor alone. This alone can help the Prium cut down more on the gasoline consumption. The Prium is fitted with the motor that gives more power than the one used by the Insight. This means that the Pruis runs a longer distance by the motor with good acceleration than that of the Insight.

   Such new model of the Prius was displayed at the North American motor show held in Detroit in January 2009 and drew the world attention.

   The company boasts that the new model of the Prius has achieved the "world's best level of mileage" by equipping it with the hybrid system, "THS II," in which the engine of which the system has been 90% newly developed is assembled with the motor and reduction gear. The person in charge of the public relations said that the new model runs 35.5 kilometers per liter, better than the old model.

   Further, an option is provided for the new Prius to fit a solar panel on its roof. The solar panel is to power the Toyota's new system to ventilate the room. The new Prius model is scheduled to be put on sale in the middle of May 2009 over the world starting in Japan. The hybrid version of the luxury car Lexus will also be sold starting around the summer.

   Honda will also market the hybrid sports car-type CR-Z in the course of 2010. The company further plans to introduce hybrid cars of the Fit model by 2011.

   The "hybrid battle" is likely to get severer.

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