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Lentz: Cheap Gas Shouldn’t Harm Mirai, Prius; 2015 Sales Up Slightly

Executive Summary

“But I think in the long run, when everyone is trying to sell (FCVs) in fairly large volume, it would be problematic to have a huge drop in fuel price,” Toyota North America CEO Jim Lentz says.

NEWPORT BEACH, CA – With unleaded gasoline at $3 per gallon or less in many parts of the country and the 2015 debut of two fuel-efficient models looming, it seems like Toyota executives would be sweating bullets.

But Jim Lentz, the automaker’s CEO for North America, isn’t worried, thanks to an expected niche audience for the Mirai fuel-cell vehicle and the loyalty of Prius owners.

“The good news is I don’t think it’s going to impact the launch of fuel cells, because I think people that are going to buy fuel cells are very similar to the first Prius buyers (in that) they have a love of (the) environment, they have a love for technology,” Lentz tells WardsAuto in an interview during a Mirai media preview.

The Mirai goes on sale late next year in California, while the next-generation Prius hybrid also is due in 2015, across the U.S.

Lentz notes gas in the $1-per-gallon range didn’t harm the Prius when the first generation launched in 2000.

“But I think in the long run, when everyone is trying to sell (FCVs) in fairly large volume, it would be problematic to have a huge drop in fuel price,” he says.

For now, Toyota is calling for small volumes of the Mirai in the U.S.: 200 in Q4 2015 in California and 3,000 by late 2017 in the U.S.

For the next-gen Prius, which he calls “quite spectacular,” Lentz believes the owners’ affection for current and prior models will drive them into showrooms for a replacement.

“(We) have 2 million owners (and) they’re fairly loyal to those vehicles,” he says. “I think we’re going to be fine.”

Toyota also expects to conquest owners of other brands’ hybrid vehicles with the new Prius, but cheap gas wooing those who’ve never owned a hybrid may make that task tougher.

“The challenge is going to be to get non-hybrid (owners of conventional internal-combustion-engine vehicles) to consider hybrids if gas is less than $3 a gallon. That will be a challenge,” Lentz says.

Cheap gas is impacting Toyota in other segments this year, as the U.S. new-vehicle buyer continues to move away from cars toward light trucks, specifically CUVs.

Toyota-brand car sales were up 1.2% through October, WardsAuto data shows, but Toyota light-truck deliveries rose 10.7% in the same period. However, the brand has sold 100,000 more cars than light trucks this year.

“I think (cheap gas is) impacting the entire industry,” Lentz says. “I think the spread now is almost nine points (of market share). I don’t recall when it’s been that large of a spread for as long as it has been.”

WardsAuto data shows the gap, while historic, is not quite that high, with light trucks holding a 52.7% share of U.S. light-vehicle sales through October and cars a 47.3% share.

Toyota is on target, Lentz says, to hit its goal of 2.3 million sales in the U.S. this year. Including Lexus and Scion deliveries, Toyota was at 1.975 million through October.

Toyota has not released an official forecast for U.S. sales in 2015, but Lentz feels a slight increase, on the order of another 200,000 units, is likely.

cschweinsberg@wardsauto.com

 

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