MKTG118 Toyota Prius

MKTG/118
IBS Center for Management Research

Toyota Prius: A Case in New Product Development
This case was written by Mikkilineni Pushpanjali, under the direction of Sanjib Dutta, IBS Center for Management Research.
It was compiled from published sources, and is intended to be used as a basis for class discussion rather than to illustrate
either effective or ineffective handling of a management situation.

2006, IBS Center for Management Research. All rights reserved.
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Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: info@icmrindia.org
www.icmrindia.org

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MKTG/118
The Prius is solid evidence that the ponderous development process that produces new
automobiles is finally on the brink of a genuine technological breakthrough.
1

- Popular Science Magazine, July 1997.
We believe that clearing environmental hurdles and offering an attractive driving experience are
critical for cars to thrive in the 21st century.
2

- Hiroyuki Watanabe, Senior Managing Director, Toyota in 2003.
INTRODUCTION
In December 1997, Toyota Motor Corporation (Toyota) of Japan launched its hybrid vehicle Prius in
the Japanese market. This was one of the first mass-produced hybrid vehicles in the world. It used the
Toyota Hybrid System (THS), which combined an internal combustion engine fueled by gasoline with
an electric motor. Prius achieved a balance between high mileage and low emissions and was the
upshot of the companys initiative to produce environment-friendly automobiles and its goal of
manufacturing the Ultimate Eco Car (Refer Exhibit I for the Ultimate Eco Car goal of Toyota).
The Prius generated a lot of enthusiasm in the industry as it was both efficient and stylish. It was
also a safe car. The car conformed to Japanese regulations and standards pertaining to
environmental pollution. Having sold more than 100,000 units worldwide by 2002, it was the best
selling hybrid car model in the world. The company introduced further refined models in 2000 and
2003. Toyota introduced Prius in the US market in 2000. Before entering, Toyota conducted a
research study of the US market and consumer preferences there. It developed various strategies
specifically for this market based on its research findings. The price of the new improved Prius
was unchanged from that of the original Prius. These initiatives helped Prius to break successfully
into the tough US market even though it was based on a new concept of a hybrid car.
In 2001, the Automotive Engineering International
3
recognized Prius as the worlds best engineered
passenger car. By 2002, it was being sold in North America, Japan, Europe, Hong Kong, Australia and
Singapore. Analysts opined that the demand for hybrid cars would rise because of the unstable oil
prices and the growing need for environment friendly products. Commenting on the future of green
technologies and on Prius in particular, Chris Giller of Grist.org
4
said, In the marketplace, green
technologies and industries are among the fastest growing and most innovative developments. The
Toyota Prius has defied every prediction to become the must-have car. The organic food business
doubles every time you blink. Green architecture is taking off. Renewable energy, emissions trading,
environmentally-conscious investing: many of the most exciting advances in environmental thinking
are happening in the private sector.
5

1
Annual Report, 1998, www.toyota.co.jp
2
Yuri Kageyama, Toyota Unveils Beefed-Up Hybrid, www.cbsnews.com, April 17, 2003.
3
Automotive Engineering International is a magazine published by the Society of Automotive Engineers.
The magazine contains latest information about the technology, and the products manufactured.
4
Grist.org (Grist Magazine) was an online magazine providing environmental news. Grist was a non-
profit organization established in 1999 and headquartered in Seattle, Washington.
5
Chip Giller, The Environments New Bling, www.boston.com, April 21, 2005.
2
BACKGROUND NOTE
TOYOTA
Toyotas history goes back to 1897, when Sakichi Toyoda (Sakichi) diversified into the textile
machinery business from his traditional family business of carpentry. He invented a power loom in
1902 and founded the parent organization of Toyota, the Toyoda Group, in the same year. In 1926,
Sakichi invented an automatic loom that stopped operating when a thread broke. This prevented
the manufacture of imperfect cloth. (Calling attention to problems and rectifying them at the
earliest later became an important part of the Toyota Production System (TPS)). The same year,
Sakichi formed the Toyoda Automatic Loom Works (TALW) to manufacture automatic looms.
Sakichis son Kiichiro, an engineer from Tokyo University, was more interested in automobiles
and engines than the familys textile business. In 1929, he traveled to the US and Europe to study
the manufacturing processes in car factories there. After returning to Japan, he spent his time
studying car engines and experimenting with better ways to manufacture them. In the early 1930s,
Kiichiro convinced his father to launch an automobile business and in 1933, Sakichi established an
automobile department within TALW. The first passenger car prototype was developed in 1935.
In 1936, Sakichi sold the patent rights of his automatic loom to a company in England to raise
money to set up a new automobile business. Kiichiro was made managing director of the new
venture. The new company was named Toyota, which was written with eight brush stokes (eight
being considered an auspicious number in Japan). Kiichiro traveled to the US again in the late
1930s, to study the manufacturing processes at Ford. He saw that an average US workers
productivity was nine times that of a Japanese worker. He realized that the productivity of the
Japanese automobile industry had to be increased if it was to compete globally. Armed with a
strong knowledge of the Ford production system, Kiichiro returned to Japan determined to adapt
the system to smaller production quantities, more suitable to Japan. In addition to adapting Fords
model, he also developed a system where each process produced only the exact number of parts
required for the next process in the production line, and at the right time. This system was called
Just-in-time (JIT), within Toyota.
Although the automobile venture was set up in the late 1930s, passenger car production began only
in 1947. (During the Second World War (1939-1945), the company was involved in building
military vehicles.) Toyota faced tough competition from Ford and GM, which were the top car
manufacturers in Japan at that time. In 1950, after a major strike by labor unions, Kiichiro was
forced to step down and his cousin Eiji Toyoda (Eiji), who was also an engineer from Tokyo
University and a valued aide of Kiichiro, was made managing director.
Eiji followed in Kiichiros footsteps and traveled to the US to study Fords River Rouge
manufacturing facility
6
. Though he was impressed by the scale of production, he also realized that
the system was ridden with several manufacturing inefficiencies. He decided to set up a system at
Toyota that would be free of such inefficiencies. Taiichi Ohno (Ohno) helped him in this venture
and their efforts became the foundation of the Kanban system. Ohno also traveled to the US in
1956 and came back with several ideas on which he based the TPS. In 1957, Eiji renamed Toyota
The Toyota Company.
Toyotas first export to the US was the Toyota Crown. But this model did not prove successful as
it was too slow for US highways. However, the Corolla, which was exported in 1968, was a huge
success due to its reliability and relatively low price. Toyotas cars soon became popular in the US,
thanks to their high quality and good resale value.

6
Fords car manufacturing facility along the Rouge River in Detroit. It was the most highly integrated car
manufacturing plant in the world in the early to mid 1900s.
3
Toyota received a major boost in the late 1970s, when the oil crisis made many people shift to
Toyotas cars from fuel thirsty American and European models. The crisis also sent Japan into
recession and most of the auto makers suffered losses. However, the efficiency and flexibility of
the TPS helped Toyota bounce back. This naturally heightened interest in the TPS in Japan. (The
system formally came to be known as the TPS in 1977. Until then, it was a chain of techniques that
were adopted within Toyota.) In 1978, a group of engineers from Toyota, under the guidance of
Ohno, gave a presentation at Tokyo on the TPS. Many managers expressed an interest in learning
more about the system. Toyota brought TPS to the US in the 1980s, when it set up a joint venture
with GM called New United Motor Manufacturing, Inc. (NUMMI).
In 1983, the companys name was changed to Toyota Motor Corporation. In 1988, Toyota opened
its own plant in Georgetown, Kentucky. Two years after the Georgetown plant opened, three
Massachusetts Institute of Technology researchers, James Womack, Daniel Jones and Daniel
Roos, published a book about the effectiveness of TPS called The Machine that Changed the
World.
7
The writers coined a new term lean manufacturing - for the approach used in Toyotas
factory.
In the early 1990s, as Toyota expanded its overseas operations, excessive capital spending affected
its profit margins. Tatsuro Toyoda (Tatsuro), who took over as the companys President in 1992,
began to control costs by eliminating all unnecessary expenditure. In 1995, after Tatsuro resigned
due to health reasons, Hiroshi Okuda (Okuda) became Toyota president. In 1996, Toyota
consolidated its production in North American production units into the Cincinnati-based Toyota
Motor Manufacturing (North America).
In 1999, Okuda replaced Chairman Shoichiro Toyoda and Fujio Cho (Cho) became the president
of the company. In the same year, Toyota listed its shares on both the New York and London stock
exchanges. By the early 2000s, Toyota had become one of the top manufacturers of cars in the
world, and was poised to become the biggest automobile company.
As of 2005, the company had production bases in 26 overseas countries and regions and vehicle
sales network in 170 countries and regions. It employed 260,000 employees worldwide. On June
2005, Katsuaki Watanabe (Watanabe) became the companys President. Under the leadership of
Chairman Okuda and President Watanabe, the companys net revenue reached 18.55 trillion
while its net income reached 1.17 trillion in 2005 (Refer Exhibit II for Financial Highlights).
HYBRID CARS
Ferdinand Porsche
8
manufactured the first hybrid-electric car in 1898. In the 1960s a few attempts
were made to manufacture hybrid cars by applying turbine engines to the production of the
vehicles. A turbine-powered race car was introduced in 1967 with the turbine engines powering
the wheels through a mechanical transmission.
The need for cleaner and more efficient vehicles led to the development of hybrid vehicles in the
1970s. In 1970, a program called the Federal Clean Car Incentive (FCCI) was started by the US
government. This program led to the development of a hybrid prototype in 1972. The program was
scrapped in 1976 by the Environmental Protection Agency (EPA) of the US. In 1993, another
program called the Partnership for a New Generation of Vehicles (PNGV) was launched in the US.
The partners in the program: Chrysler, Ford, GM, and a few governmental agencies, developed
hybrid prototypes but never commercialized them. In 2001, the program was replaced by
FreedomCAR initiative by the new administration under George W. Bush, which focused more on
hydrogen-based vehicles.

7
Published in 1990 by Rawson Associates.
8
Ferdinand Porsche was born in 1875. He was an Austrian automotive engineer who developed the
Volkswagen. His son Ferry Porsche founded a German sports car company, Porsche AG.
4
Toyota has had a long history of more than three decades in manufacturing hybrid vehicles. Toyota
displayed its first ever hybrid vehicle, Sport 800 with a gas turbine
9
and an electric engine, in the
1977 Tokyo Motor Show. The vehicle was based on the Series hybrid system (Refer Exhibit III for
a brief on different hybrid systems).
Toyota announced the Earth Charter in 1992. The document contained the details about the
companys target to manufacture and sell cleaner and safer automobiles with the lowest and least
harmful emissions. The aim was to introduce innovative vehicles using new technologies and
alternative sources of power. This initiative began gaining momentum with the formation of the G21
committee (Globe - 21
st
Century) by the companys Executive Vice President (R&D) Yoshiro
Kimbara in the 1990s. The committees brief was to research cars suitable for the 21
st
Century. This
paved the way for the development of Prius, Highlander Hybrid, and other hybrid models.
Prius was the refined version of a model vehicle, based on the Energy Management System (EMS)
10

in 1994. The Toyota corporate officials approved the model vehicle on June 30, 1995, and it was
introduced as Prius on October 27, 1995 at the Tokyo Motor Show. The name Prius was derived
from the Latin word ahead or to go before. It was described as a full hybrid power train, which
could run on engine, or batteries or a combination of both (Refer Exhibit IV for a Hybrid Power
Train).
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The company also developed the Coaster Hybrid vehicle in 1997 which had an engine
similar to that of the Sport 800. In 2001, Toyota launched the Crown Hybrid and Estima Hybrid in
Japan. In 2002, it launched the Toyota FCHV (Fuel Cell Hybrid Vehicle) in the Japanese market.
KNOWLEDGE MANAGEMENT AT TOYOTA
According to analysts, Toyotas success in both the local and global markets was based on its
gaining a competitive advantage through implementation of innovative and path-breaking ideas on
its production floors. Toyota had focused on learning from the very beginning. At Toyota,
knowledge sharing was intertwined with its people-based enterprise culture, referred to as the
Toyota Way. The five key principles that summed up the Toyota Way were: Challenge
12
, Kaizen
(improvement), Genchi Genbutsu (go and see), Respect and Teamwork. The Toyota Way
recognized employees as the companys strength and attached great importance to developing
human abilities through training, coaching and mentoring. The principles of Respect for People
and Continuous Improvement were at the core of the Toyota Way.
Most experts agree that the TPS system at Toyota worked by combining its explicit
13
, implicit
14

and tacit
15
knowledge. Toyota trained new employees by bringing them to an existing facility
where they worked alongside the highly trained managers. Once the training was over, this group

9
Gas turbines are similar to the turbofan engines that power jet aircraft. A gas turbine burns fuel in a
combustion chamber that causes a blade-covered shaft to turn at high speed. Toyota has been working on
the turbine hybrids since 1965. (Source: www.toyota.com)
10
The EMS is a propulsion system or design which consists of an electric-motor connected to a regular
gasoline engine using a Cone & Belt type Continuously Variable Transmission (CVT). The storage
device for electricity is an ultra-capacitor, rather than a battery-pack. ( Source: http://john1701a.com)
11
A full hybrid vehicle has a gasoline engine with an electric motor. It also has batteries to enhance fuel
economy. The gasoline engine powers the car and charges the batteries for the electric motor which
provides power to the wheels of the vehicle. When the car stops at a traffic jam, automatically the engine
also turns off. Thus the system achieves higher efficiency in energy recovery and higher driving
performance through the use of gasoline or electricity or a combination of both.
12
The Challenge principle gives the employees a long-term, realistic and stretching vision for the company
that will add real value to the business. It prevents the company from becoming complacent even in the
best of times. It continuously challenges itself to keep the spirit of Kaizen.
13
Explicit knowledge is that which has been articulated in some form like text or tables.
14
Implicit knowledge is that which can be articulated. Its existence is implied by or inferred from
observable performance/ behavior.
15
Tacit knowledge cannot be articulated. The concept is captured through the statement: We know more
than we can tell.
5
of workers was joined by an extremely skilled old worker group and as operations began at the
new factory, it was ensured that all technical knowledge was passed on to workers at the new
plant. Toyotas total knowledge base incorporated the knowledge flow in its processes and
routines, as well as in the interactions between its workers, suppliers, and managers. Experts
identified Toyotas knowledge-driven work culture as a major contributor to Toyotas success.
The use of quality circles at Toyota also illustrated a combined implicit and explicit approach.
Toyota workers spent one or two hours at the end of each week, analyzing the performance of their
part of the production system, to identify actual or potential problems in quality or productivity.
During these quality circle meetings, employees proposed measures to solve identified problems
and discuss the results of the measures taken during the week to address earlier problems. This
practice led to processes being refined on a continuous basis, leading to fewer errors at a later
point. The suggestions received from the quality circles were scrutinized by Toyota production
engineers and included in task description documents.
16
Toyota even had designated green
areas
17
next to its production lines where employees could discuss work and any problems they
anticipated during production on any day.
According to experts, Toyotas ability to form alliances with its partners enabled it to add
tremendous value to its knowledge generation efforts. Toyota followed the JIT system to make its
supply chain effective and adaptive. Toyota successfully used its supplier network for creative
knowledge generation and sharing which helped it to respond to changes quickly. Toyotas
supplier networks collaborated actively on joint training and building long-term relationships.
Toyotas KM practices were considered unique because KM was embedded in its culture, unlike at
most other enterprises where it was implemented as a separate and independent effort. KM
practitioners recognized that Japanese culture had always considered learning as an important
endeavor. The Japanese were also known for their love of detail and perfection which further
drove learning. The characteristics of a typical Japanese organization like lifelong employment,
teamwork and trust also contributed to a favorable learning environment. Many Toyota practices
like Hansei
18
, Kaizen and Nemawashi
19
were in fact not specific to Toyota but were seen across
most Japanese firms. Although practices like Kaizen encouraged learning on one hand, on the
other they made it difficult for Toyota to implement explicit KM processes. The Kaizen concept
ensured that processes underwent continuous change and the recording of these continuous
changes became difficult. However, with increasing globalization and greater technological
support, Toyota had increased its efforts toward explicit knowledge management.
Toyotas guiding principles emphasized the need to innovate, and ensured that the philosophy had
support from the top management. The policy deployment process at Toyota called Hoshin
Kanri ensured that the organization was adequately directed and motivated to learn. The goal
setting process was objective and included inputs from across the organization. Toyotas
performance measurement metrics were also more process oriented than result oriented. This again
supported the culture of learning and the focus on improving processes was not lost.
The development of Prius demonstrated the benefits of knowledge creation. With the Prius project,
Toyota beat its own record of having the fastest development process in the world. Though the
Prius project used a completely novel design and technology, Toyota was able to reach the
production stage within 15 months. This was especially impressive as hybrid technology was in a
very crude stage at that time and Toyota had to carry out both research and development activities
for the Prius simultaneously.

16
These documents provide a detailed description of the procedure to perform each task, the time allotted
for it, the sequences to be followed and a check list that enables workers check their own work.
17
The green in green areas refer to the plants kept in the area.
18
Refer page eleven for details on Hansei.
19
Nemawashi referred to the concept of making decisions by consensus, after a thorough consideration of
all options and followed by rapid implementation.
6
The Prius project enabled the company to create a new process for product development. Since
Toyota was under strict deadline pressure to commercialize a new technology that was not fully
developed, it could have created just a few engine designs and then tested them to arrive at the
final prototype. However, the company preferred to try out as many as 80 hybrid engine designs
and test them to arrive at the final choice. This process was referred to as set based concurrent
engineering. The company developed many new practices which further enhanced its knowledge
creation process. For example, it changed the process of design finalization. Earlier, the chief
engineer used to create the design concept and then discuss it with design and planning groups.
Under the new approach adopted for Prius, the chief engineer discussed the concept with not only
the design and planning teams but also the production engineers. CAD systems were put in place
to facilitate better management of information. The development of the Prius became an important
learning exercise for the younger Toyota engineers.
Other models that were a testimony to Toyotas knowledge creation capability were the RAV4
which used hydrogen fuel technology, and the Highlander, the worlds first mass market seven
passenger hybrid Sports Utility Vehicle (SUV). The Scientific American magazine
20
awarded
Toyota the Business Leader of the Year award in 2003 for commercializing this affordable
hybrid vehicle. Apart from its legendry use of JIT and the Kanban, other process and system
innovations introduced by Toyota were the concept of Autonomation
21
; the use of Poka-Yoke
22

mechanical fail-safe devices to prevent mistakes; and the Single Minute Exchange of Die (SMED)
system which reduced machine setup time to permit smaller lot sizes. Toyota also developed a new
flexible assembly line termed the Global Body Line
23
which contributed further to its cost
advantage. This assembly lines installation costs were half those of the system it replaced, and it
could be modified to suit a new model for 70% less than Toyotas previous production system.
THE ORIGINAL PRIUS
The original Prius was powered by the THS. The THS was an advanced version of the EMS. THS
is a power train that combined an internal combustion engine and an electric motor. It was based
on the series/parallel hybrid system. It contained a power split mechanism that divided and sent
power through two passages. Through one passage, the power from the gasoline engine was
transmitted directly to the wheels of the vehicle while through another passage, the power from the
engine was converted into electricity with the help of a generator that charged the battery and
drove the electric car.
The Original Prius (Prius NHW10) was launched in Japan on December 10, 1997. The original
Prius was stylish and safe with a four-door and five-passenger sedan. It had several advantages
over conventional cars. It provided quiet and comfortable driving similar to that of an electric
motor car. Its fuel efficiency was double that of conventional cars. It ran 52 miles per gallon in the
city and 45 miles per gallon on highways.
24
The most important aspect was that it reduced the
emissions. According to Mary Nickerson, Technical Marketing Manager for Toyota Prius, Id
have to say that the single most important feature is that the Prius achieves about an 80% reduction
in smog-forming emissions.
25

20
Scientific American is a science magazine, published in the US since 1845. It provides insights into
developments in science and technology.
21
Also called as Jidoka in Japanese, it referred to the use of machines and workers that stop a line or
process automatically when abnormalities occur.
22
Pronounced POH-kah YOH-kay.
23
It was aimed at creating a production line that would ensure flexibility, so that Toyota production
facilities around the world could easily add/switch new models or improve production of existing models
within a short period while ensuring top quality.
24
1 gallon = 3.7854 liters
25
John Laumer, Tree Hugger Interviews Mary Nickerson, www.treehugger.com, October 03, 2005.
7
One of the strengths of the Prius was its safety system which was given key importance during its
development. To comply with Japanese crash-safety standards, the company integrated its Passive
Safety Body Technology
26
which provides safety to the driver and the passengers in a crash. It had
the standard airbag Supplement Restraint Systems (SRS), a safety provision for passengers in the
front and rear seats.
27
The car offered several storage conveniences and basic controls without
compromising on the handling parts. The audio system was installed below the instrument cluster.
It also had a 5.8 inch LCD monitor which displayed a multitude of information including the
energy flow system of the engine and the navigation system.
The original Prius was well received by Japanese customers and in the first year of its launch, sales
approximated 18,000 units. Because of the increase in demand, Toyota had to step up production
levels on three separate occasions from the existing level during the first year itself. Prius was the
first commercially mass-produced and marketed hybrid automobile. It won Japans car-of-the-year
award for 1997-98.
THE FIRST GENERATION PRIUS
In 2000, Toyota introduced its first generation model of the Prius in the US, Europe and other
markets. This model was also called Prius NHW11 or Prius Classic. A few modifications were
made to the vehicle to meet vehicle standards for California, USA. Modifications were made to the
engine by increasing the horsepower from 58 to 72. The battery pack was changed from the
standard D to a flat-rectangular one. The LCD monitor was converted into a touch-sensitive one,
eliminating the need for external buttons. The first generation Prius was lighter, smaller and more
powerful than the original Prius. The vehicle complied with the Super Ultra Low Emission Vehicle
(SULEV) standard.
28

Marketing the First Generation Prius in the US
For Toyota, marketing the first generation Prius in the US was a challenge. Commenting on the
launch of Prius in the US market, Senior Vice President and General Manager of Toyota Motor
Sales, Don Edmond (Edmond) said, Frankly, it was one of the biggest crapshoots I've ever been
involved in. Not because we lacked confidence in the quality of the product. Or the logic of the
concept. Or the significance of this breakthrough technology. The key was to convince consumers
in the U.S. that hybrid technology was more than a science project. More to the point, the key
would be convincing them that Prius was a real car.
29

Before introducing Prius in the US, Toyota conducted a market research study on consumers and
their preferences in the US. Toyota studied the consumer behavior of Americans to identify their
target customers in the market through focus groups. The company conducted family demos in the
major US cities such as Chicago, New York, Los Angeles, San Francisco, and Washington DC. It

26
Passive safety is the concept of protecting the passengers during a collision. The Passive Safety Body
Technology includes seatbelts, airbags, and other equipment that provide protection to the passengers.
27
During a collision, the airbags inflate automatically, cushioning the driver and the passengers and
preventing them from being pushed or thrown forward.
28
The SULEV standards were set by the California Air Resources Board (ARB), which is a department of
the California EPA. The standard is given to a Zero Emission Vehicle (ZEV) which does not give out any
emissions while operating. A ZEV that gets a partial credit is called as a Partial Zero-Emission Vehicle
(PZEV) which meets the SULEV standard by giving out air pollution at a 10% reduced level to that of an
ordinary vehicle. It should also have zero evaporative emissions from its fuel system along with an
extended (ten-year/150,000-mile) warranty on its emission-control components. Advanced Technology-
Partial Zero Emission Vehicle (AT-PZEV) standard is given to a vehicle which is an advanced version of
the PZEV.
29
Gary S. Vasilash, The Toyota Prius: The Most Important 04 Model? Yes On Cars, Automotive
Design & Production, www.findarticles.com, October 2003.
8
also publicized and provided information about Prius through the internet. The companys focus
group showed that the car was well received by early adopters and innovators who were more tech
savvy. Toyota classified its potential customers into the categories of early adopters, innovators
and the early majority.
30

Through its research, Toyota found that most people in the US preferred trucks and SUVs. The
research also indicated that the demand for luxury vehicles was picking up. The company realized
that a specific advantage that the company could hope to benefit from was the increasing demand
for vehicles that consumed low gas since gas prices were on the up. US consumers also tended to
subscribe to the concept that bigger is better. Toyotas research identified the internet as the
major source of information for consumers in the US market; thus advertising and publicity
through the internet was considered vital. Another important point picked up was that the price of
the car was a major concern for a large part of the market in the US.
Toyota used these pointers to fix its goals for selling the first generation Prius in the US. The
companys strategy was to win over the buyer by emphasizing the clean environment and high
technology features that the Prius embodied. Cleaner and more fuel-efficient vehicles formed the core
of its Unique Selling Proposition (USP).
31
It also worked to gain dealer participation and support for the
marketing and sales of the hybrid car. For this, Toyota decided to stick to traditional selling methods.
Prius had all the attributes of a conventional car - it was a convenient, high quality, comfortable and
safe car. Additionally, it embodied high technology (similar to the original Prius, not launched in the
US) and was priced the same as the original Prius. After putting its selling strategies in place, Toyota
launched the Prius in the US in August 2000. The car was available with more than 900 dealers. But
even before the model arrived at showrooms, the company had sold about 1,800 Prius cars through the
internet by the end of July. To allow its US customers to make a thorough evaluation of the car, Toyota
allowed them to test drive the Prius for a whole day.
One of the most important reasons for the success of the first generation Prius was buzz marketing.
The car was publicized more by word of mouth through early owners especially on the internet.
Many websites giving lots of information about the car came up. Some of these were:
www.priusonline.com, www.priuschat.com, http://john1701a.com/, etc. The websites talked about
the Prius in its different versions, its features, the technology, and the availability of the car, and
also displayed photographs, besides covering all the advantages it enjoyed over conventional and
other hybrid cars.
The first generation Prius was a great success in the US market. It got rave reviews from the
media. Leonardo DiCaprio, Cameron Diaz, Will Ferrell, Bill Maher and Alexandra Paul were
among the celebrities who had bought a Prius. Commenting on the Prius, Leonardo DiCaprio said,
I own a Toyota Prius; its a step in the right direction. Its a gasoline-electric midsize car that gets
about 50 miles per gallon. We have the technology to make every car produced in America today
just as clean, cheap and efficient.
32

30
The purchasing behavior of consumers, particularly for innovative products is studied by market
researchers through an understanding of the adoption process. The adoption process categorizes
consumers as innovators, early adopters, the early majority, the late majority and the laggards. The
innovators are the set of people who adopt a product when it is very new in the market, because of its
newness. The early adopters buy new products and give word-of-mouth publicity about it to others. The
early majority waits for the innovators and early adoptors to purchase the product and purchases only
when the product is successful. The late majority purchases the product after the early majority by which
time the product is being purchased by most consumers in the market. The last set is of the laggards who
take decisions very late and do not necessarily purchase the product at all.
31
Unique Selling Proposition (USP) is a marketing concept, which differentiates a product from those
offered by the competitors. The proposition should be strong and unique and should convince the
customers to change brands.
32
Celebrity Hybrid Cars, www.hybridcars.com
9
The first generation Prius was priced at $ 19,995 similar to that of the original Prius. Analysts
believed that the company was selling the Prius at a loss. However, the company declared that the
product was highly profitable. Prius chief engineer Masao Inoue (Inoue) said, Toyota has largely
recovered its initial long-term investment in the first-generation Prius.
33
Within one year, the
company sold 15,556 cars in the US and the number rose to 20,119 in 2002 while worldwide sales
reached 100,000 units by March 2002.
THE SECOND GENERATION PRIUS
Toyota began evaluating the popularity of its first generation Prius in the market soon after it was
launched. The evaluation was based on the price, performance and social aspects of the product as seen
by buyers and potential customers. Through its research, the company realized that Prius was sought
after by some consumers because of its basic characteristic of being green. The company also found
that the product needed some improvements in terms of its looks, quality and performance in order to
win itself a larger market share. The company then took steps in this direction.
The next concept Toyota developed for their hybrid vehicle line was called the Hybrid Synergy
Drive (HSD). The second generation Prius was powered by the Toyota Hybrid System II (THS II)
which was based on this concept (Refer Exhibit V for the comparison between THS and THS II).
The THS II tried to achieve low emissions and high power performance simultaneously so as to
deliver high fuel efficiency together with an exciting driving experience. The system was powered
by two sources, a gasoline engine and an electric motor. The engine was highly efficient and
operated on the basis of the Atkinson Cycle
34
.
The second generation Prius or the new Prius (also called the 2004 Prius and the Prius NHW20)
was launched in the US market on April 17, 2003 (Refer Exhibit VI for comparison between the
original, the first generation and the second generation Prius). By September 01, 2003, it was made
available for sale at the Toyota outlets worldwide. The new Prius with THS II provided a smoother
driving experience. While the size of its internal combustion engine was the same as its
predecessors, it produced 76 hp at 5,000 rpm compared to that of the first generation Prius which
produced 70 hp at 4,500 rpm. It also had a magnetic electric motor which produced 67 hp.
The new Prius featured Toyotas highly developed electronic control systems. Through its state-of-
the-art hybrid control technology, Toyota fitted the vehicle with the Steering Assisted Vehicle
Stability Control System (S-VSC) and the Intelligent Parking Assist System, both firsts in
motoring history.
35
The S-VSC system integrated the Vehicle Skid Control (VSC)
36
with the
Antilock Braking System (ABS)
37
, the Electrically Controlled Brake system (ECB)
38
, the Traction
Control System (TRC)
39
and the Electric Power Steering system (EPS)
40
. This allowed controlled
movement and stability in driving during starting, acceleration, and braking.

33
34
The Atkinson cycle is a heat cycle engine proposed by James Atkinson (U.K.) in which compression
stroke and expansion stroke duration can be set independently. (Source: www.toyota.co.jp)
35
Toyota Survey as of August 2003. (www.toyota.co.jp)
36
Sometimes, the vehicle loses control due to skids that are caused from loss of traction in the front or rear
wheels. In such cases, the Vehicle Skid Control System in motor vehicles helps in controlling the vehicle skid.
37
The Antilock Braking System in motor vehicles helps in preventing the wheels from locking while
braking. It helps the driver to maintain braking control during sudden braking.
38
The Electrically Controlled Brake system is electrically operated. It consists of a brake controller that
supplies electricity to the brake system. Higher braking is applied at a greater voltage.
39
The Traction Control system helps the car to avoid skidding while speeding up or accelerating by
maintaining contact between the surface of the road and the wheels of the car.
10
The Intelligent Parking Assist System guided the steering while parking the car along a sidewalk
or a pavement, and while reversing into parking spaces. The vehicle was fitted with an
Electroshiftmatic system
41
which had a gearshift and an ignition switch (push-type) which could be
automatically controlled by the engine. All the systems (mentioned in the previous paragraph)
contributed to the achievement of the worlds lowest emissions of any car and the highest fuel
efficiency level of 60 miles per gallon for city driving and 51 miles per gallon for highway driving.
The new Prius was fitted with 5 doors and it provided wide and comfortable cabin space for both
the passengers and the cargo. Its additional features included Electromultivision - a large 7 inch
monitor with a touch sensitive screen. It had superior visual lucidity and was easy to operate. The
screen displayed information pertaining to the energy flow, the air conditioning and the audio
system of the vehicle. The Supplement Restraint System (SRS) or airbags were the safety features.
The new Prius was a fuel-efficient and an ultra-low emissions vehicle. The vehicle complied with
the Advanced Technology-Partial Zero Emission Vehicle (AT-PZEV) Standards. Due to the high
efficiency of the engine, the carbon dioxide emissions were reduced by 50% and there was a 90%
reduction in the emissions of carbon monoxide, hydrocarbon and nitrogen oxide.
The Testing
The most important feature of the new Prius was its enhanced safety. The company had worked
toward child safety and reducing the impact of collisions to a remarkable degree. The new Prius
and a Toyota Land Cruiser were made to collide for test-crashes, with both vehicles moving at 50
km/h. The company further strengthened the body of the car and the seat structure, as this would
reduce the impact of any collision on the rear of the car. The electric circuits and the fuel tank
were also given special protection from the impact of any collision.
The new Prius was put through 125 crash tests. Through elaborate computerized simulations using
different design options and materials, the company finally worked out a body that was light-
weight as well as extremely strong and crash-resistant. To achieve a low body weight with high
strength, about 45% of the body was made from high-strength steel. At vital places on the body,
Toyota used ultra high-strength steel which was 2.5 times stronger than high-strength steel.
Prius had the usual safety equipment which included eight airbags, and a knee protection panel.
The car also had the standard Child Restraint System (CRS). It had a 2 stage seatbelt warning
system and an intelligent child seat design complying with the International Standard Organization
FIX (ISOFIX) system
42
, both specially developed by Toyota. The car was also fitted with
Whiplash Injury Lessening (WIL)
43
, Electronically Controlled Braking (ECB2), Electric Traction
Control (E-TRC) and Vehicle Stability Control Plus (VSC+).
The new Prius was the first hybrid car which was tested by the EuroNCAP
44
. The car passed
rigorous crash tests and was among only eight cars that achieved the top rating of five stars as per
the Occupant Protection Rating given by EuroNCAP. EuroNCAP awarded Prius with 4 stars in
Child Protection, and 2 stars in Pedestrian Protection. The car featured as the top performer in
safety in the D-segment or luxury cars segment (Refer Table I for the EuroNCAP ratings).

40
The Electric Power Steering System is used for reducing the steering effort by using the power supplied
by an electric motor for power steering.
41
The Electroshiftmatic system is an electronically controlled shift stick and a parking position switch. It
helps in shifting gears easily using the fingertips.
42
ISOFIX is an international standard developed by ISO. It is an attachment system for designing child car seats
without a seatbelt. It ensures that the child seat is not too loose. This protects the children during an accident.
43
Whiplash Injury Lessening (WIL) is a seat design that reduces the damage to the passengers head and
neck during rear collisions.
44
EuroNCAP is the European New Car Assessment Programme. It is a safety assessment programme for
automobiles supported by the European governments, manufacturers and motoring organizations
worldwide. It publishes safety reports on new cars and awards star ratings based on the performance of
the vehicles with respect to crash tests, including front, side and rear impacts.
11
Table I
The EuroNCAP Ratings
Name of the Car Occupant
Protection
Child Protection Pedestrian
Protection
Family Cars
Peugeot 407 ***** **** **
Saab 9-3 Convertible ***** *** *
Toyota Prius ***** **** **
Volvo S40 ***** **** **
Small Family Cars
Opel/Vauxhall Astra ***** **** *
Renault Mgane CC ***** *** **
VW Golf ***** **** ***
Super-Mini
Honda Jazz **** *** ***
Small MPVs
Toyota Corolla Verso ***** **** **
Fiat Doblo *** *** *
Roadsters
BMW Z4 **** NA **
Opel/Vauxhall Tigra **** NA **
Source: Lean, Green and Safe: Toyota Prius achieves Euro NCAP top rating for occupant and child
safety, www.euroncap.com, June 24, 2004.
Toyota introduced the new Prius (second generation) with much pomp and show in the US. The
company focused on the new HSD concept, the design of the car and how it was a big
improvement over the preceding model. Toyota advertised the new Prius through the internet,
print, TV, and radio. The use of celebrities, government agencies and strategic partnerships, all
formed part of its marketing mix (Refer Table II on the various strategies adopted by Toyota in the
US to market the new Prius).
Table II
Marketing Strategies of Toyota Prius in the US
Media Sources
Internet April 17, 2003, Interactive; Live: toyota.com/newprius,
www.prius.com
Tax Sites
Portal Homepages Yahoo, MSN (MSN Technology Showcase)
Toyota.com
12
Media Sources
Print Advertisements May 2003 and June 2003, Weeklies and Monthlies Business
2.0, The New Yorker, Fast Company, Popular Science, Time
October 2003 to September 2004 Forbes, Entertainment, True
Confessions, Newsweek, Cooking Light, Vanity Fair, Yoga
Newspapers The Wall Street Journal, Automotive News, Detroit
Free Press, The New York Times, Associated Press, Brandweek,
Advertising Age
Television (National
TV)
Network TV Meet the Press, Evening News, Today Show, Alias
Cable TV PBS-Toyota World of Wild & National Geographic
Spot TV Markets included Atlanta, Boston, Chicago, Denver,
LA, NY, Sacramento, Seattle/Tasoma, St. Louis, Washington DC
Radio :10 National Radio NPR: All Things Considered, Morning
Edition, Talk of the Nation, Fresh Air
:60 Spot Markets: Boston, Denver, San Diego, Seattle, Chicago,
New York, LA, Sacramento, San Francisco, Washington DC
Celebrity
Endorsements
Oscars: Annually provide Prius vehicles to celebrities to drive to
the Oscars ceremony
Celebrity owners Cameron Diaz, Leonardo DiCaprio, Robin
Williams, Tim Robbins: While the stars can show their
commitment to the environment, Toyota is provided with
unsolicited testimonials from the Hollywood community.
Government
Agencies, and Non-
Government
Organizations
Governmental OrganizationsU.S. Department of Energy -
Clean Cities network: Accelerating the introduction and expanding
the use of advanced technology and alternative fuel vehicles across
the U.S.
Non-Governmental OrganizationsGlobal Green: Fosters a
global value shift toward a sustainable and secure world through
education, advocacy, partnerships, and programs
Trade AssociationsElectric Drive Transportation Association:
Represents organizations that develop and produce battery, hybrid
and fuel cell technologies, and serves as a central source of
information on technical, market and policy issues
Other Strategies
(Sponsored by
Toyota)
Environmental Media Association Awards: Awards for TV and
Motion Picture productions which best communicate the
environmental message
Prius Start Now Tour
Ride & Drive caravan along east coast & southern states
November December
Partnership with Whole Foods
Participants learn about Prius and Hybrid Synergy Drive in
an interactive format
Handraiser/participant info provided to local dealers via
Lead Delivery Tool
13
Media Sources
Michelin Bibendum
Electric Vehicle Symposium 20
th

Race to Stop Global Warming
Drive to Survive
American Lung Association Walks
International Yoga Expo
Engines-of-Change Tour
During October and November
Ride & Drive tour in 15 cities
Targeted at opinion leaders (local personalities, celebrities,
government officials)
Provide hands-on learning of Toyotas commitment, Prius and
hybrid technologies
Source: Mary Nickerson Driving Hybrids into the Mainstream, www.eere.energy.gov.
OUTLOOK
Toyota expected higher demand for the new Prius than the earlier versions. Edmond said, We are
targeting a sales volume of 36,000 for the first full year. Thats three times our sales target for
Prius (original) when it launched in the U.S.
45
The new Prius is very efficient and includes many
new features over the first generation Prius but is priced at the same level of $ 19,995 (Refer
Exhibit VII on Specifications of First Generation and New Prius).
By October 02, 2003, more than 17,500 Prius had been ordered in Japan. By September 2004,
more than 100,000 Prius cars were sold in the US alone, while about 244,000 of them were sold
worldwide (Refer Exhibit VIII for Prius sales in the US and Hybrid registrations in the US during
2000-2004). By September 2005, about 367,000 Prius cars were sold worldwide, of which 44% of
them were sold in Japan and most of the remaining were sold in North America.
The company has been developing newer versions of the car every year. Toyota introduced the
2005 Prius at a cost of $ 21,275. The 2005 Prius with the HSD had all the performance related
features of the earlier versions. It also had state-of-the-art technology like the Bluetooth
technology.
46
The technology was built into the navigation system in the car and it allowed users to
use their phones comfortably without using their hands.
Toyota had about 300 patents for the original Prius and 370 for the new Prius. Few competitors
have licensed the technology from Toyota and have brought out hybrid versions of their cars
(Refer Exhibit IX for hybrid cars from competitors). Toyota has also agreed to share its hybrid
technology with Nissan Motor Co., Ltd.
47
Prius had captured many awards in the industry. It won

45
46
Bluetooth technology is used in mobile phones. The technology was developed by Ericsson, IBM, Intel,
Nokia and Toshiba which formed the Bluetooth Special Interest Group. It is used for short range
transmission of digital voice and data that support point-to-point and multipoint applications.
47
Nissan Motor Co., Ltd (Nissan) was a Japanese automobile manufacturing company founded in 1932 as
Datsun. It was renamed as Nissan in 1983. It manufactured cars and trucks and began exporting to other
countries from 1950s. The company also sold small cars by entering into joint venture with other
companies.
14
the Excellence in Environmental Engineering Award given by the Sierra Club in 2000. The new
Prius won the Motor Trend Car of the year award and the North American Car of the Year
award in 2004. It also won the 2005 European Car of the Year award (Refer Exhibit X for awards
won by Prius).
Toyota aims to sell a million hybrid cars worldwide by 2010. Toyota also plans to release new
hybrid cars including the hybrid version of its Camry
48
in 2006.

48
Toyota Camry was introduced by Toyota in 1980. It is a midsize car. The manufacturing facilities for it
are located in the US, Australia and Japan. In 1983, Toyota introduced Camry to the US market. The US
is the biggest market for the car and it has also sold well in Australia and other Asian countries. However,
Camry has not been successful in the Japanese and the European markets (as its design did not match the
tastes of the European and Japanese consumers). Toyota introduced later versions of the car in 1987,
1992, 1997 and 2002.
15
Exhibit I
The Ultimate Eco Car Goal of Toyota

Source: www.toyota.co.jp.

16
Exhibit II
Toyota Financial Highlights
(Yen Millions except per share data and share information)
2005 2004 2003
Net Revenues
Sales of products 17,790,862 16,578,033 14,793,973
Financing operations 760,664 716,727 707,580
Total 18,551,526 17,294,760 15,501,553
Costs and Expenses
Cost of products sold 14,500,282 13,506,337 11,914,245
Cost of financing operations 369,844 364,177 423,885
Selling, general and administrative 2,009,213 1,757,356 1,891,777
Total 16,879,339 15,627,870 14,229,907
Operating income 1,672,187 1,666,890 1,271,646
% of Net Revenues 9.0% 9.6% 8.2%
Income before Income Taxes, Minority Interest
and Equity in Earnings of Affiliated Companies
1,754,637 1,765,793 1,226,652
Provision for Income Taxes 657,910 681,304 517,014
Net Income 1,171,260 1,162,098 750,942
ROE 13.6% 15.2% 10.4%
Per Share Data ()
Net Income (Basic) 355.35 342.90 211.32
Cash Dividends 65 45 36.00
Shareholders Equity 2,767.67 2,456.08 2,063.43
Source: Toyota Annual Report 2005, www.toyota.co.jp.

17
Exhibit III
A Brief on Hybrid Systems
A hybrid system refers to the combination of different sources of power. There are three major
types of hybrid systems used in the hybrid vehicles.
Series hybrid system:

In the series hybrid system, the engine drives a generator and the electric motor uses the
electricity generated from the generator to drive the wheels. Since the power of the engine and
the motor are in a series, the power also flows to the wheels in a series, therefore it is called as a
series hybrid system. The engine generates the electricity and the electric motor drives the
wheels.
Parallel hybrid system:

In a parallel hybrid system, both the engine and the electric motor drive the wheels, and the
power from these two sources can be utilized according to the prevailing conditions. Since the
power flows to the wheels in parallel, it is called a parallel hybrid system. In this system, the
battery is charged by switching the electric motor to act as a generator, and the electricity from
the battery is used to drive the wheels. Here, the wheels are mainly driven by the engine and the
motor assists in acceleration.
Contd
18
Contd
Series/parallel hybrid system:

The series/parallel hybrid system combines the series hybrid system with the parallel hybrid
system in order to maximize the benefits of both the systems. It has a gasoline engine and an
electric motor. Depending on the driving conditions, the system uses only the electric motor or
the gasoline engine or both to achieve the highest efficiency level. This is done with the help of
a power split device.
Adapted from www.toyota.co.jp.

Exhibit IV
Hybrid Power Train

Source: Automotive Glossary, http://auto.consumerguide.com.

19
Exhibit V
Comparison between THS and THS II (HSD)
THS and THS II (HSD)

The Way the THS II (HSD) Works

Source: www.toyota.co.jp.
20
Exhibit VI
Comparison between the Original, First Generation, and
Second Generation Prius
Second
Generation Prius
(NHW20)
First Generation
Prius
(NHW11)
Original Prius
(NHW10)
Engine HP 76 70 58
Engine kW 57 52 43
Engine RPM Redline 5000 4500 4000
Motor HP 67 44 40
Motor kW 50 33 30
Motor Torque 295 258 225
0-60 MPH (seconds) 10.1 12.5 14.1
Tire Width 185 175 165
Tire Diameter 15 14 15
Battery-Pack Energy (W/kg) 1250 900 600
Battery-Pack Voltage 201.6 273.6 288
Battery-Pack Weight (lbs) 99 110 125
Battery-Pack Section Type Module Module D-Cell
Battery-Pack Section Count 28 38 40
Hybrid-System Voltage 500 273.6 288
Multi-Display Size increased,
Electric A/C
introduced
Touch Sensitive External buttons
Adapted from http://john1701a.com/.
1997 Original Prius

Source: www.answers.com.
Contd
21
Contd
2000 First Generation Prius

Source: Julian Edgar, The Story of Turboing a HybridPrius, (Part 5, Final Result),
http://autospeed.drive.com.au/cms/A_2664/article.html, October 04, 2005.
2003 Second Generation Prius

Source:http://auto.consumerguide.com/Auto/Used/reviews/full/index.cfm/id/2512/act/usedcarre
viewphoto/.
22
Exhibit VII
Specifications Comparison
Specifications Second Generation Prius NHW20 First Generation Prius NHW11
Class Midsize Economy car
Body styles 5-door hatchback 4-door sedan
Seating 5 5
Engine HSD THS
Length 175.0 in 169.6 in
Height 58.1 in 57.6 in
Width 67.9 in 66.7 in
Wheelbase 106.3 in 100.4 in
Curb weight 2890 lb 2765 lb
0-60 mph 10.1 sec 12.5 sec
Passenger
volume
96.2 cu ft 88.6 cu ft
Luggage
capacity
16.1 cu ft 11.8 cu ft
Colors Black, Super white, Millennium
silver metallic, Driftwood pearl,
Salsa red pearl, Tideland pearl,
Seaside pearl
Black, Aqua Ice Opalescent, Blue
Moon Pearl, Brilliant Blue Pearl,
Electric Green Mica, Golden Pearl,
Silver Strata Metallic, Super White
Multi-Display Liquid-Crystal, Touch-Sensitive, 7.0
inch width Energy Monitor,
Consumption Data, A/C (Heater &
A/C) Interface, Audio & Cell-Phone
& Navigation Interfaces
Liquid-Crystal, Touch-Sensitive,
5.8 inch width, Energy Monitor,
Consumption Data, Audio
Controls
Other
Features
By-Wire: Throttle & Braking &
Gear-Selection, Electric A/C,
Electric Steering, Traction-Control
Cruise-Control, 4 Cupholders,
Double Glovebox, Power Windows,
Power Door-Locks, Power & Heated
Mirrors, Rear Defroster, Keyless-
Entry Remotes, AM/FM/CD + 6
Speakers, Tilt-Steering with Audio
& Climate Controls, 60/40 Split-
Folding Rear Seat, LED Brake
Lights, Intermittent Rear Wiper
AM/FM/Cassette with 4 speakers,
Rear Windows go all the way
down, A/C & Heat can be set to a
specific temperature, Keyless
Entry remotes, 2 come standard
Launched in 2003 2000
Contd
23
Contd
Performance Comparison

Second Generation
Prius
First Generation Prius
Fuel Economy
City 60 mpg 52 mpg
Highway 51 mpg 45 mpg
Combined 55 mpg 48 mpg
Engine Performance
Engine displacement 1497 cc 1497 cc
Max power 76 hp @ 5000 rpm 70 hp @ 4500 rpm
Max torque 82 lb-ft @ 4200 rpm 82 l-ft @ 4200 rpm
Emission Ratings
Advanced Technology
Partial Zero Emission
Vehicle (AT-PZEV)
2
(Rating 2)

Super Ultra Low
Emission Vehicle
(SULEV)
Motor Performance
Power Output 67 hp @ 1200-1540 rpm 44 hp @ 1040-5600 rpm
Torque 295 lb-ft @ 0-1200 rpm 258 lb-ft @ 0-400 rpm
Maximum Voltage 500 V 300 KW
Battery Pack Performance
Total Weight 99 pounds 110 pounds
Total Voltage 210.6 V 273.6 V
Type
Nickel-Metal Hydride
(NiMH)
Nickel Metal Hydride
(NiMH)

Adapted from http://john1701a.com.
24
Exhibit VIII
Prius Sales in the US
Year (December) Cumulative Sales (Units)
2000
a
6,401
2001 21,957
2002 42,076
2003 66,703
2004 120,694
2005
b
219,964
a
From launch till December 2000
b
Till November 2005
Source: http://autos.groups.yahoo.com/group/toyota-prius/message/89989.
New Hybrid Vehicle Registrations in the US during 2000-2004
Year Number of New Registrations in the US
2000 7,781
2001 19,963
2002 35,934
2003 45,943
2004 83,153
Source: R.L. Polk & Company, Press Release, April 25, 2005, http://www.eere.energy.gov/
vehiclesandfuels/facts/2005/fcvt_fotw381.shtml.

25
Exhibit IX
Hybrid Cars from Toyotas Competitors
Car
Year of
Release
Price
(2006)
Mileage Warranty
Honda Insight
(Honda)
1999 $ 18,880*

City 61
mpg
Highway
70 mpg

3-year/36,000 mile limited
warranty
Battery pack -8 year/80,000-
mile warranty and all emissions-
related equipment comes with a
more extensive warranty
Honda Accord
Hybrid (Honda)
2004 $ 30,140 City - 29
Highway
- 37

warranty
Battery pack -8 year/80,000-
Honda Civic
Hybrid (Honda)
2003 $ 21,850 City - 46
Highway
- 51

warranty
Battery pack - 8 year/80,000-
Ford Escape
Hybrid (Ford)
2004 $28,525 City - 33
Highway
- 29

3 years/36,000 miles limited
warranty
Hybrid Components - 8
years/100,000 miles warranty
Mercury Mariner
Hybrid (Ford)
2006 $29,225 City - 33
Highway
- 29

3 years/36,000 miles limited
warranty
Hybrid Components - 8
years/100,000 miles warranty
* Price of the car in 1999
Compiled from various sources.
26
Exhibit X
Awards and Recognition
Year Organization Awards & Recognition
2005
Caroftheyear.org European Car of the Year
Intellichoice.com Best Overall Value of the Year
2004
The Wall Street Journal Transportation Technology and
Innovation Winner 2004
Automobile Magazine Design of the Year
North American Car and Truck of the
Year Awards
North American Car of the Year
Car and Driver (Magazine) 10 Best List
Automotive Engineering International Best Engineered Vehicle of 2004
International Engine of the Year
Awards
International Engine of the Year
Business Week Industrial Design Excellence Awards
Gold
Edmunds.com Consumers Choice for Most Significant
Vehicle of 2004
Wards Auto World 10 Best Engines
Michelin Challenge Bibendum Technical Integration Award for
Production Cars
The Economist Innovation Award in Energy: Takeshi
Uchiyamada, Senior Managing Director,
Toyota, for developing the Prius hybrid
Car
Rave Awards Business Leader: Shiqeyuki Hori,
Executive Chief Engineer for Prius,
Toyota
Wired Rise of the Green Machine
American Lung Association Presidents Circle Award
2003
Business Week Magazine Best New Products of 2003
Fortune Magazine 25 Best Products of 2003
Popular Science Best of Whats New Grand Award
2002
Belgian Federation of Automotive
Journalists, Belgium
Belgium FuturAuto prize winner
27
Year Organization Awards & Recognition
2001
National Wildlife Federation, USA National Conservation Achievement
Awards
USA Corporate Achievement
American Council for an Energy
Efficient Economy, USA
Greenest gasoline-powered passenger
sedan in the United States
Wards Auto World Magazine, USA One of the 10 Best Engines for 2001
Society of Automotive Engineers,
USA
Best Engineered Car of 2001
Top Gear, UK 2001 Specialist Award
2000
International Engine of the Year,
Europe
Best Eco Engine
1999-00 Japans COTY committee, Japan Car of the double decade
1999
Fleet World Honours, UK Technical innovation award
Fleet News, UK Special car award
Europe
Best engine 1.4L-1.8L category
Europe
Best Eco Engine
United Nations, World Global 500 Award for Environmental
Commitment
Royal Society, UK Esso Energy Award
Freie Fahrt (Austria), Austria Environmental Award
ARBOE (Austrian touring club),
Austria
1st rank Environment Award
1998
IBCAM-British Carriage and
Automobile Manufacturers, UK
Auto Design Award
AA Awards, UK Environmental Commitment

1997-98

Japan New technology of the year
Japan Car of the Year
Japan Car design award
Source: www.toyota.com and Hybrid vs Diesel, http://townhall-talk.edmunds.com, Feb 15, 2005.

28
Additional Readings & References:
1. Michelle Vadeboncoeur, Prius unit sales history (USA), http://autos.groups.yahoo.com,
December 02, 2005.
2. Survey finds 15 of 31 most reliable cars are Toyotas, www.boston.com, October 27, 2005.
3. Associated Press, Driving home need to go green, www.boston.com, October 20, 2005.
4. Toyota recalling Prius, www.cnn.com, October 14, 2005.
5. Most fuel-efficient cars for 2006, www.cnn.com, October 13, 2005.
6. Julian Edgar, The Story of Turbo'ing a Hybrid Prius, (Part 5, Final Result)
http://autospeed.drive.com.au, October 04, 2005.
7. John Laumer, Tree Hugger Interviews Mary Nickerson, www.treehugger.com,
October 03, 2005.
8. Toyota May Build Prius in California, www.edmunds.com, August 15, 2005.
9. Jeff Bartlett, Road Test: 2000 Toyota Prius, Are gasoline/electric hybrids ready to
transcend cult status? www.motortrend.com, August, 2005.
10. Most Hybrid Vehicles Not as Cost-Effective as They Seem, www.edmunds.com, June 01, 2005.
11. Chip Giller, The environments new bling, www.boston.com, April 21, 2005.
12. Hybrid vs Diesel, http://townhall-talk.edmunds.com, Feb 15, 2005.
13. Bruce Piasecki, Social Response Capitalism: Product Development Strategies for 21st-
Century Innovators and Investors, www.ahcgroup.com, January 2005.
14. Prius continues to win awards and media attention, www.toyota.com, 2005.
15. Toyota Prius Crash Test, www.newstreet.it, July 04, 2004.
16. Press Release, Lean, Green and Safe: Toyota Prius achieves Euro NCAP top rating for
occupant and child safety, www.euroncap.com, June 24, 2004.
17. The Clean Air Rules of 2004: The Next Chapter in Americas Commitment to Clean
Air, http://yosemite.epa.gov, April 14, 2004 (Major speeches delivered by US EPA
Administrators, 2001-2004).
18. Joshua Skov, Trend Watching, www.greenbiz.com, January 2004.
19. Gary S. Vasilash, The Toyota Prius: The Most Important 04 Model? Yes On Cars,
Automotive Design & Production, www.findarticles.com, October 2003.
20. Is Toyota Prius the Most Important 2004 Model? www.motortrend.com, November 11, 2003.
21. Press Release, Toyota Launches All-new Prius, www.toyota.co.jp, September 01, 2003.
22. Toyota Launches All-new Prius, www.toyota.co.jp, September 01, 2003.
23. Bruce Piasecki, Automaking and the New Century: Social Response Product
Development as Corporate Strategy, www.ahcgroup.com, June 2003.
24. Irene M. Kunii, Toyota Is Way Ahead of the Hybrid Pack, Can its new Prius crack the
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