Can Hyundai Face Down Japan’s Hybrid Prius in Its Own Backyard?

By dancurranjr On May 23rd, 2009

hyundai_avante_blackMotorists will have a wider range of choices of eco-friendly vehicles after Japan’s top hybrid makers decided to market their products in competition with Hyundai-Kia models. With Toyota and Honda poised to release their versions, Hyundai-Kia’s first commercial production of more fuel-efficient and eco-friendly vehicles is also underway.

Toyota’s signature model, the Prius, will be available in Korea in October. The newest edition, which was released Monday in Japan, posted 75,000 sales orders even before its launch. Honda is also biding its time before introducing its hybrid, the New Insight, to Korean customers.

Hyundai-Kia Automotive plans to launch liquefied petroleum injection hybrid editions of its sedans, the Avante and the Forte, in July and September, respectively.

The Prius has a fuel efficiency of some 30 kilometers per liter, well ahead of the 17.2 kilometers of the Avante. That’s also linked to the reason Hyundai-Kia decided to go for liquefied petroleum gas (LPG) instead of gasoline in the development of hybrid models. Since LPG is cheaper than gasoline, low fuel costs can offset the disadvantage in fuel efficiency.

Hyundai-Kia is also currently working on a gas hybrid of the Sonata sedan. The launch of this new model is scheduled for later this year, before debuting in the U.S. market early next year. Backed by this advantage, prices will play the decisive factor for Japanese makers, industry watchers say.

If Toyota offers relatively reasonable prices, and the yen becomes cheaper against the won, prices of the Prius could come down to around 30 million won, according to industry sources. In Japan, the latest Prius model starts at 2.05 million yen. Avante and Forte hybrids, on the other hand, are expected to go for about 25 million won.

Experts say Japanese models could dominate the hybrid market if their prices are set below the 30 million won mark. The Japanese vehicles have already proved themselves over a decade-long history in global markets. Nearly 1.25 million Prius sedans have been sold worldwide since it was first launched in 1997.

“With the price set under 30 million won, the Prius could even make inroads into the Korean mid-sized sedan market, beyond the hybrid one,” Prof. Kim Pil-soo of Daelim College said. Still, it remains to be seen whether Toyota will introduce a cheaper or high-end edition here. In Japan, the highest-class Prius model is sold at over 40 million won.

Toyota Korea said the price policy for the vehicle is still flexible.

“Nothing has been confirmed about the price,” a Toyota official said. “For now, I can only say it will be decided at a level not too far ahead or behind those of our possible rivals in the market.” Hybrid vehicles are regarded as having the biggest potential for market expansion. Last year, a total of 496,000 were sold worldwide, growing over three times in four years from 163,000 in 2004.

Currently, Japanese makers take up more than 90 percent of the global market, with Toyota accounting for more than 80 percent.

SOURCE: Korea Times

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