For more than a year now, the Prius has enjoyed some hefty sales in Japan thanks to the government subsidies for hybrids. But now that the cash-for-clunkers program is coming to an end, sales of Toyota's hybrid model will most likely take a hit, according to automotive analysts.
Under the program, many Japanese buyers flocked to trade in their 13+ year-old car for a Prius. With the subsidy window coming to a close, there will be a need for dealers to readjust their sales strategy.
Tokyo Toyopet Motor Sales Co. new-car sales chief Hiromi Inoue claims dealers will be ready for the upcoming "unavoidable collapse" after the program ends. He says, "The daily pace of orders for the Prius is already dropping [from an average of 20 cars a day in June to 8 in August]. We are bracing ourselves for the coming crisis."
The Japan Automobile Dealers Association says they are expecting Japanese car sales in total to take a 23% dip, following a post-subsidy trend started in Europe and America.
Part of Toyota's sales drop specifically is due to a backlog for the Prius, which means that between the order time and delivery the subsidy window will have closed. Some analysts think dealers will try to balance the unavoidable sales drop with their own incentives. This will thankfully be padded by some of Toyota's cleverly-spent repair costs.
Basically, Toyota overpaid its dealers for the repairs needed in that massive recall, which gives dealers a little room to work with financially. Other plans to bottleneck that negative sales flow include banking on fleet buyers and reminding consumers of the other benefits of owning a hybrid (like tax breaks).
Competing Japanese automakers could be looking at drops as high as 21% (Honda) or as minimized as 1% (Nissan).
By Phil Alex
Source: Bloomberg
