Case study on Toyota Prius (Hybrid Car)

A Case study On Toyota Prius

Submitted to Prof. Aqsa Akbar

Submitted by Faisal Javed Virk -------------- MBA3y02103-152 Syed Ali Faizan Kazmi ------- MBA3y02103-113 Asghar Ali ---------------------- MBA3y02103-098 Khalid Yousaf ------------------ MBA3y02103-173 Sehrish Imtiaz ------------------ MBA3y02103-123 Sobia Siddique ----------------- MBA3y02103-141

Section B Semester Strategic Business Planning

4th

Lahore Business School University Of Lahore

Toyota Prius
A case of Toyota Prius (v)
Prius is the first hybrid car that was started selling in 1997 in Japan. Now it is sold in more than 70 countries and its major markets are America, United Kingdom and Japan. It has 3 generations, first one is XW10 (1997 2003), second generation is XW20 (20032009) and 3rd generation is XW30 (2009present). Due to this car Toyota market share is increased in America, Europe and Asia. This case study is about Prius that when it created and how it came into the market its market share its technology its strength, weaknesses, opportunities and threats, in short all about the Prius.

___________________________________________________________________________ The word Prius came from a Latin word and its meaning is before. Toyota said this name is given to this car because it is before the environmental awareness. The first Prius that was introduced in Japan in a motor show in 1997 a dynamic car after that Toyota made a lot of cars they acquire the whole market. Prius have 3 generations. First Generation (1997-2003). The first Prius car was NHW10 and it was available in market December 10, 1997 only in Japan with a price of US$19,995. Prius was the world's first mass-produced gasoline-electric hybrid car. In America it was the second such hybrid car first one was Honda insight. The California Air Resources Board (CARB) granted the car with an air pollution score of 3 out of 10 as an Ultra Low Emission Vehicle (ULEV). In

Europe Prius sale was started in 2000 and in Australia it started in 2001 in Sydney Motor show. Second Generation (2003-2009) In 2004 the new Prius XW10 was launched it was more comfortable and environmentally friendly as compare to previous model. California Air Resources Board classified that car as Super Ultra Low Emissions Vehicle an advanced technology partial zero Emission vehicle. From 2000 to 2009 FAW motors build that car in china for Chineses market. In 2006 2152 Prius were sold and in 2007 this figure was brought down to 414, the main reason behind that was high prices and increased competition. In 2008 to minimize this effect Toyota motors cut the prices up to 8%. Company gave the warranty of battery of 150,000 miles or 10 years and 100,000 miles of hybrid components. The Prius was safest car according to U.S National Traffic Safety Administration they gave four stars for passenger safety, five stars for driver safety in frontal collision test out of five stars and four star for side crash for driver and passenger and four out of five for role over testing. Third Generation (2009-present) Third generation include XW30. It was introduced in January 2009 at North American international Auto Show and its sales began on May 2009. For second generation Honda Insight was a great threat to minimize its effect Toyota management made many steps for third generation to compete with Honda Insight, they cut the price of XW30 from 2.331 million to 2.05 million. They also made many changes in overall structure of Prius they made such a engine that have no need of accessory belt, its motor and transaxle were 20% lighter it had disc brakes instead of simple ordinary brakes. Its headlamp was updated and it had an art of fantasy bumper. It had a 6.1 inch touch screen, a USB port fori Pod connectivity, auxiliary input

jack, Bluetooth hands-free phone capability and streaming audio. It had a solar panel on its roof, that provide the power to ventilation fan while parking it keep the interior

cool in warm condition. The Prius (v) include a HDD Navigation system; a dynamic Radar Cruise Control and Lane keep Assist. In Euro NCAP testing, the Prius was given five out of five stars, and rated 88 percent for adult protection, 82 percent for child, 68 percent for pedestrian, and 86 percent for overall safety assistant. Sales around the world Prius is the most demanded car around the world due to its technology. Total sale of Prius car from 1997- September 2012 is around 2.87 million units. It is sold in more than 70 countries but its largest markets are in Europe, Japan and USA. In Europe in 2000 100,000 units and in 2010 200,000 units were sold. Among all European countries UK has 20% share for sale of Prius. In 2009 in Japan 208,876 units were sold and total sale of Prius in 2011 in USA was 50% of total sale of world. Prius was the most demanded car all over the world but due to Global Financial Crisis of 2009 also affect its sale decreased by 139,682 in 2009. But in 2011 when oil prices were going to increase the Prius sale increased in first quarter of 2011. The earthquake and tsunami of 2011 also affect its production, its production was stopped for several days & when it started Toyota faced the problem of shortage of parts from supplier. In 2012 gasoline and petrol prices are increasing constantly as a affect of this the Prius sale also increasing. In March 2012 Toyota has a record sale of 28,711 units in USA & it was a record sale for one month. Threats & opportunities around the world In 2007 a threat arouse for Prius, about its quietness. Base of that threat was that the quite cars are safety risk for those people who rely upon the car sound to sense the location of cars and main focus was on blind pedestrians who cant see (wall street Journal).

Toyota management take necessary actions regarding that matter and for third generation car they introduced a device, that device ring a beep when car automatic system found any pedestrian near to car. One more threat was the recession period of 2009 to 2012. Due to that period prices of everything were increasing and as a result income is decreasing, due to high prices of raw material Toyota increase the price of Prius. One greatest opportunity for Prius is that many organizations and Governments support them because these cars are environment friendly and cost saving e.g. Bank of America offers their employees working more than 20 hours a week, reimbursement of US$3000 on the purchase of new hybrid vehicle. Google, Clif Bar and Co, Hyperion Solution offers their employees reimbursement of US$500 toward their purchase of hybrid cars. So overall we can say that Toyota Prius is ultimate choice for consumers because of its low price and best quality. Questions 1. How the inflation effect the Toyota Prius and how Toyota overcomes that? 2. Does Prius can enter in Pakistan and India? 3. Does high cost of battery effect on its sale? 4. How much other Green cars effect Prius (hybrid) car?

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Questions and their answers 1. How the inflation effect the Toyota Prius and how Toyota overcomes that? In 2009 when the inflation period was started overall all the industries was affected. Prius sale was also affected it was decreased by 139,682 units in 2009. Toyota management was tried to overcome that problem but earth quick of 2001 and tsunami affect its production because of shortage of raw material from supplier. In 2011 oil prices were increasing due to that peoples were converted on hybrid cars because those were economical. By this mean the affect of inflation be reduced and sale increased. 2. Does high cost of battery effect on its sale? Prius battery was very expensive to replace it varies from $2200 to $2600 from a Toyota dealer and if it is replaced from outside it costs up to $500. That high cost could be a threat for Prius about their customer. That effect was minimizing by Toyota management by increasing the life cycle of battery. The new battery that they gave in car was warranted for 150,000 miles or for 10 years. 3. How much other Green cars effect Prius (hybrid) car? Other hybrid cars like Honda insight, Lexus CT200h, 2012 Honda civic, Nisan leaf SV effect Prius sale but Prius due to its advantages have plus point over all other cars, second one Prius price is low among all of them. 4. Does Prius can enter in Pakistan and India? In Pakistan there are many Prius that are imported by other countries like Japan and USA in Pakistan there is a big shortage of petrol and CNG, in fact CNG is only available for three days for users and prices of both of them are also increasing and cost of living is also increasing in this circumstances Prius can be a best substitute of normal cars because it is economical and have only initial cost, and same condition is in India. _______________________________________________________-