Toyota Prius just keeps on going
Four years since its last redesign, there's more competition on the market, but the hybrid car is still a hit.
NEW YORK (CNNMoney.com) -- Nowadays, most car models get a major redesign about every 4 or 5 years. By that time, sales have started to slow as competitors have introduced fancier, better cars in the auto industry's endless cycle of one-upsmanship.
In that respect, the Toyota Prius is entering its golden years and should be ready for retirement soon. Rumors are even circulating about a possible replacement.
But there's something different about the Prius. Even now, the Prius is selling at a pace any car company would call hugely successful. Of all hybrid vehicles sold in America so far this year, more than half were Priuses and, thanks to increased production, Prius sales this year are up 76 percent so far this year.
The Prius is the company's third best-selling car here so far this year. With sales of 124,620 cars, it ranks behind only the Camry (324,000 cars) and Corolla (262,000).
As it ages and the market becomes more competitive, the Prius is losing little of its steam. "That's not been true of any other model that I'm aware of," said Tom Libby, an analyst with Power Information Network.
Its "days to turn" number - a measure of how long a car typically stays on a dealer's lot before being delivered to a customer - is 10. The industry average is in the mid-60s. Among hybrid cars, the closest any other comes is Toyota's own Camry Hybrid with 15 days, according to Edmunds.com.
This very success is why federal tax incentives for Toyota (Charts) hybrids have been reduced. To give American automakers a fighting chance, Congress wrote a phase-out provision into the tax credit rules. As a given car company sold more hybrid vehicles, tax credits on its vehicles would diminish then, finally, vanish.
Already, Prius tax incentives have been cut to 25 percent of their original $3,150. By the end of this month, there will be no federal tax credits at all for the Prius or any of Toyota's hybrid vehicles.
So far, though, the lack of tax credits hasn't seemed to hurt. Toyota hasn't had to pile on its own incentives to make up for it. Incentive spending per car on the Prius is now $71, according to Edmunds.com. That compares to $685 for the Ford Escape Hybrid and nearly $1,500 for the Nissan Altima Hybrid.
Among industry experts, the most often cited reason for the Prius's continued success is, simply, that it looks unlike any other car on the market. The Prius is instantly recognizable, even from a block away, as a hybrid car.
For those who want to make a public statement about their desire to help the environment, that's an important selling point. "Even with our other hybrids, you've got to squint to see the hybrid badge," said Toyota spokesman Wade Hoyt.
But the standard take on the Prius's success - the idea that buyers just want to make a statement - probably oversimplifies its remarkable appeal.
"There was the potential for this to be a flash in the pan, the car of the moment. It's not," said Jack Nerad,Editorial Director for Kelley Blue Book and author of the Complete Idiot's Guide to Hybrid and Alternative Fuel Vehicles.
The Prius is successful, most importantly, because it asks its buyers to sacrifice nothing while making a statement. Prius drivers are not shoehorned into a cramped little car with no room for a family's weekend luggage. And, while it won't be showing up your local drag strip this weekend, the Prius is quick enough to keep up with most ordinary family cars.
Since it was designed from the wheels up as a hybrid vehicle, sacrifices were minimized. Since its body was designed around a hybrid drivetrain, batteries included, it has all the storage and interior space of a normal midsized car. Other hybrid sedans, like the Altima and Camry, lose storage space to battery packs.
And, don't forget, the Prius gets better fuel economy than any other car on the market. It gets a combined 46 miles per gallon, according to new, and more realistic, EPA testing methods.
The Prius's hybrid-only status helps in other ways, as well. When someone shopping for a Honda Civic Hybrid arrives at the dealership, he's faced with a clear choice. Several non-hybrid Civics are bound to be on the dealership floor right next to the Hybrid version. They will cost less money for what is otherwise the same car, and they will offer fuel economy that, if not quite as good, is still very good.
For the Prius shopper, no such temptation exists. You either buy the Prius or you don't.
And things that normally drive down prices of other cars - increased supply and large numbers already on the road - may paradoxically be helping the Prius.
Increased supplies of the car have reduced once-daunting waiting lists. And the fact that the Prius has been around for a while isn't dulling the car's luster, suggested Lonnie Miller, a spokesman for auto market research firm R.L. Polk. In fact, it's probably adding to it.
"I think, really, what it has going for it is that it has the longest accumulated reputation behind it," he said.
Other than one recall for a software problem, Prius owners haven't experienced big problems with their cars. Battery replacement also has not been a problem, even for cars put into heavy fleet use. Because of their design and how they're used, hybrid car battery performance doesn't decay the way laptop and cell phone battery performance does.
Hybrid technology costs money, of course, so there is a price to be paid for that extra fuel economy when compared to a similar non-hybrid car. So far at least, the Prius's freakishly strong resale value more than makes up for that initial investment. A Prius bought three years ago can still sold for nearly its original price.
Experts at Kelley Blue Book don't see any reason to think those strong resale values will continue for long, though. With production massively ramped up, today's Prius buyers will likely face a softer market for used Priuses when they go to sell.