Toyota develops hybrids with eye on future

TRAVERSE CITY, Mich.--Toyota is developing 10 hybrid electric models for sale worldwide by early in the next decade, the company's top North American executive said Wednesday.

The company expects that a quarter of its sales in the United States will use the technology by then as it tries to sell 1 million hybrid vehicles a year worldwide. That would put it far ahead of projections for hybrid sales across the industry.

"At our current rate of sales, that's about 600,000 hybrids in the U.S.," said Jim Press, president and chief operating officer of Toyota Motor Sales USA, in comments at a conference in northern Michigan. "To achieve that goal, we will have to look at offering hybrid power systems in virtually all of our vehicles, including trucks."

Press dismissed concerns by some consumers and reviewers that Toyota and Honda were using the technology to increase horsepower in newer hybrid models, eroding fuel economy benefits. And he said that the proliferation of technology in modern cars had led to what he called an epidemic of recalls.

"It caught up with all of us in 2004 when the industry recalled 30.6 million vehicles, nearly twice the number we sold last year," he said.

The hybrid push is a goal of Toyota's strategy as it looks to increase its share of the world's auto market to 15 percent, which would probably vault it past General Motors as the world's largest automaker. Press and other Toyota executives have said that the volatility of gas prices, political instability and environmental issues make the development of the technology a priority.

Toyota sells three hybrid models in the United States--the Toyota Prius, the Lexus RX 400h and a hybrid version of its Toyota Highlander sports utility vehicle. The company has previously announced two of the 10 new hybrid models, versions of its Lexus GS sedan and Toyota Camry.

The announcement will keep the pressure on other automakers to develop fuel economy strategies to compete with Toyota, as well as Honda, the two companies that brought the first hybrids to market. So far, only Ford has responded with hybrids comparable to Toyota's popular Prius, though most other automakers have models in the works. Nissan plans to sell a version of its Altima sedan that uses Toyota's technology, and General Motors and DaimlerChrysler, companies long skeptical of the technology, have said more recently they are jointly developing a hybrid system for trucks.

Automakers have for years been exploring technological approaches to improving fuel economy. GM has been a proponent of hydrogen fuel cells, a promising technology but one with an uncertain future. Automakers are also putting new fuel-saving technologies on gasoline engines.

That said, the fuel economy of the average new vehicle sold in the United States is below where it was in the late 1980s as rising sales of SUVs and an emphasis on horsepower have trumped mileage gains, according to EPA data.

"It's a big high-stakes craps game we're in and the outcome is very much unknown," said David Cole, chairman of the Center for Automotive Research, the consulting and research group that is one of the hosts of this week's conference. He was referring to the race among fuel-saving technologies and Toyota's decision to push forward with hybrids.

Toyota does not appear to be betting on gas prices returning to $1.50 a gallon. At the same time, Toyota and Honda have been criticized for the diminishing fuel economy returns of newer hybrids like the Lexus RX 400h, as the advanced technology is used to enhance horsepower.

"A lot of that's software," Press said. "I think at some point you'll even have a button you can pick, mileage versus performance, because you're managing the system. And the other part of that is, it really depends on driving habits."

Danny Hakim reported from Traverse City, Mich., for this article, and James Brooke from Tokyo.

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Have you seen a dionsaur lately?

Obviously, GM, Ford, Chrysler followed their market just like some disk drive makers of the past. See Clay Christensen, " Innovator's Dilemma." This is a prime example how our current capital market system will destroy companies.

Ford is pursuing hybrid technology, but it is licensed from Toyota. Yes, you can say Honda and Toyota are not achieving fuel economy with some current hybrids, but they have learned to meet market requirements while developing new technology at the same time. How difficult is it to change the design from supplementing power to providing fuel economy.

Brilliant strategy and tactics while the dinosaurs in Detroit hope for divine intervention to lower fuel costs.

Dinosaurs Roam the Earth (In Detroit HQ's)

Is it any wonder that Toyota and Honda have pushed the envelope of technology to achieve superior fuel economy? The answer is simple, Japan imports 100% of its petroleum.

Meanwhile, Detroit pushed for lower CAFÉ standards to keep pushing big margin, gas guzzlers and ignored the strategic issue of higher gas prices brought on by increasing international demand.

The shame of it is the current Detroit executives driving the remaining two American manufacturers into the ground were entry level managers during the 1970s when Japan kicked their butts the first time. Now, Toyota has refined its delivery model to the point that GM can only thrash about in a desperate attempt to place blame and save market share. The cutting of prices to increase sales is the only remaining card GM has, and it plays right into Toyotas growth plans.

While GM cuts prices, eating into their profits, and forcing Ford to match their sales efforts, Toyota retains their profits and increases their investment capital. All of which is detailed by COL. John R. Boyd in his OODA loops and maneuver conflict strategies. The end result will not be pretty for GM.