The surging cost of a fill-up is figuring into the car-buying decisions of Canadians, but it's not the only reason Toyota is expanding its fuel-conscious fleet of gasoline-electric hybrid vehicles with the introduction of the station wagon-like 2006 Toyota Highlander Hybrid SUV.
The environment is also weighing on the minds of many consumers who want to drive a larger vehicle but also want to be socially responsible.
Gasoline-electric hybrids pollute less than comparably sized non-hybrids. The Highlander Hybrid, for instance, meets Environment Canada's stringent Tier 2 Bin 3 standard and it also is certified for the tough California Air Resources Board Super Ultra Low Emission Vehicle tailpipe standard.
Obviously, fuel economy plays a big role. Toyota Canada claims fuel consumption for the Highlander Hybrid is half that of conventionally powered SUVs at 7.5 litres/100 km city, 8.1 highway and 7.8 combined. A seven-passenger gas-powered V-6 Highlander gets fuel economy of 12.7 city/9.0 highway.
Clearly, there is a "feel-good factor" coming into play for many hybrid buyers who are willing to pay a stiff premium for the latest "green" automotive technology.
For a manufacturer such as Toyota, which has invested more heavily in its hybrid effort than any other auto maker, there is a significant marketing benefit in being seen as the leader in offering environmentally sensitive vehicles -- even if fuel economy and environmental gains, not to mention fuel-pump savings, are marginal compared to other vehicle ownership costs.
Not all auto makers have seen hybrids in this way.
Earlier this year at Detroit's auto show, General Motors vice-chairman Bob Lutz, who heads all product development for the giant auto maker, admitted that his company overlooked the marketing and public relations benefits of selling a growing fleet of hybrid vehicles to the public.
In analyzing the "business case" for hybrids, GM did a rigid cost-benefit analysis and found that, purely in terms of dollars and cents, the right decision was to delay the technology until it was ready for wholesale application to large fleets of fuel-swilling pickups and sport-utility vehicles.
So GM overlooked the value of hybrids to auto makers interested in creating a positive image in terms of public perception. "We forgot the emotional impact and the fact that a lot of people out there want to make an environmental statement," Lutz said.
Toyota has not made that mistake. According to J. D. Power and Associates, by 2011 the number of hybrid models will expand to 38 -- 17 cars and 21 trucks and SUVs -- and Toyota can be expected to dominate the market with the greatest variety of vehicles.
The J. D. Power study found that Toyota holds more than 60 per cent of the North American hybrid market and though its share is expected to shrink to 40 per cent by 2011, it will remain the market leader.
Indeed, Dave Hermance, executive engineer of environmental engineering at Toyota's Technical Centre in the United States, says the auto maker is on track to hit its sales goal of 100,000 gasoline-electric hybrid vehicles in 2005.
In addition to the Highlander Hybrid and the Lexus RX 400h launched in the past few months, Toyota also plans to introduce hybrid versions of the Lexus GS and Toyota Camry in the 2007 model year. They follow the highly successful Toyota Prius five-door hatchback launched earlier.
No other auto maker approaches the scope of Toyota's hybrid effort. The J. D. Power study projects that Honda's current 31 per cent of the hybrid market will slip to 20 per cent by 2011. GM's Chevrolet brand is forecast to be the largest domestic brand in the hybrid market, growing its share to nearly 15 per cent by decade's end. Ford, which last year launched the Escape Hybrid SUV and has plans to sell at least three other hybrids by next year, will be eclipsed by GM.
