viable market”Hermance talked about the history of the RAV4 and how the retail experiments Toyota used the same distribution as they did for the launch model of the Prius. 25 dealerships were selected and they would have made more money on RAV4s than Prius. The RAV4 was marketed with the charger.
The RAV4 was very effective in the multimedia campaign. The customers of the RAV4 and the Prius were internet savvy. Dealers had to buy special tools and get special training for technicians and sales. 2 1/2 million persons attended auto shows and there were ads in print media, radio announcements. PBS, TV spots, spot cable, output media, bus-tails were all utilized. There were lots of hit’s to the interactive internet. There were letters to advocacy groups. The RAV4 costs $42,000, less $13,000 to purchasers (retail), so around $29,000. The lease was $1,000 down and $329/month, which was the same as Prius.
The amount of money spent on the RAV4, according to Hermance, was $2.6 million dollars – almost $10,000 per car of advertising money. Hermance called that hideous for the RAV4. He then made the point that Toyota spent $6.8 million nationally on the Prius – almost $500 per car for the money spent advertising the Prius.
Hermance broke it down even further, saying that there were 771 million views for the RAV4, while the Prius only got 356 million, 2 times as much presence for RAV4.
Toyota.com, according to Hermance, got 17 million hit’s during the advertising blitz timeframe. Of those 17 million hit’s, the Prius got 463,000 hit’s, while the RAV4 got 800,000 hit’s. Hermance said that the 2:1 views suggested that the media was effective in getting people to the site to send me more information. The limitations, including driving range, brought the finalized deals down to for every person buying a RAV4, 15 people purchased the Prius.
The mood in the symposium was somber, but Hermance persevered, making sure that the group knew that the RAV4 was the only electric vehicle in the retail market. 50 vehicles sold in first week, but sales lingered after that.
The bad news became worse for the little plug-in that could have. 2 percent leased their Prius, while 78 percent leased their RAV4. Hermance surmised that awareness was high, sales wer low and not increasing overtime. The pent-up demand was small, and there was no competition in the market at the time. Worse yet, there was no road map to get it to profitability.
Hermance made the final blow, I mean point: the Prius improved air quality more than the RAV4 because of the significant sales of the Prius (HEV) over the RAV4 (EV) and air quality only changes when sales happen.
Hermance ended the speech by saying that hybrids are the core technology for the future. Hybridization increases efficiency of all prime movers, and increases interest in all clean vehicles. Hybrids increase air quality and increases efficiency in fuel cell vehicles as well. Not all buyers value technology the same way. There is an emotional process and we have to look past absolute fuel savings, emissions.
No mention of plug-in electric vehicles. It is still rumored that Toyota will come out with a plug-in. In a twist of fate, in an 8-minute video with Bob Lutz, Chairman of Product development, General Motors, Lutz says that “GM is planning the only infrastructure that is in place is electricity, so we are very interested in the plug-in electric vehicle.”
Toyota is being mum about a plug-in electric car and General Motors is saying quite frankly that they are not going to keep their technology in the drawer untill they think it is financially viable. They say they learned their lesson in the last round with Toyota. Expect the competition to get tougher.