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Toyota scrambles to meet hybrid demand

Alternative Fuel Sources Gain In Popularity
The Toyota Prius debuted in 1997 as the first commercially mass-produced hybrid. In America, the waiting list to buy one has grown to three or four months, the automaker says.David Paul Morris / Getty Images file
/ Source: The Associated Press

When Toyota unveiled its first hybrid vehicle nearly a decade ago, many people were skeptical about its environmentally friendly gas-and-electric-powered engine that dramatically boosts mileage.

Today, Japan's biggest automaker is scrambling to keep up with the growing demand for hybrids, especially in North America, where soaring oil prices — now double from several years ago — are suddenly making hybrids an attractive cost-saving alternative.

All the world's major automakers, including Ford Motor Co. of the United States and Japanese rival Honda Motor Co., are either selling or developing their versions of hybrids these days.

But the greatest demand is for the Toyota Prius, which debuted in 1997 as the first commercially mass-produced hybrid. In the United States, the waiting list to buy one has grown to three or four months, the company says.

Hybrids deliver great mileage by using the electric motor at slower speeds and then switching to the gas engine when the speed picks up enough for the engine to reduce pollution and deliver a more efficient drive. The vehicles charge their motor batteries while on the go.

The latest Prius gets 60 miles per gallon in the city and 51 mpg on the highway, according to the U.S. government.

Demand has grown to the point where Toyota plans to raise annual production of hybrids to 400,000 vehicles next year from 300,000 this year.

Executive Vice President Kazuo Okamoto, overseeing research and development, brushed off recent reported speculation that Toyota Motor Corp. may be locking in suppliers to maintain its domination over the burgeoning hybrid market.

The Wall Street Journal reported Wednesday some grumbling from a Ford official that the Dearborn, Mich.-based carmaker was having trouble getting hybrid parts because of Toyota's desire for auto parts. The report quoted Mary Ann Wright, head of Ford's hybrid program, as saying Toyota was trying to squeeze the component supply at an affiliate of Japanese manufacturer Aisin Seiki Co., in which Toyota owns a 23 percent stake.

"I don't know what other carmakers are saying," Okamoto said when questioned about the report at a reception this week for the Tokyo auto show. "If they want parts, why don't they place their orders?"

Unlike some Western automakers, Toyota has long maintained a network of suppliers, with which it maintains close relations including shareholdings, and keeps much of its research and parts production within its own group of companies.

Rieko Kato, Ford spokeswoman in Tokyo, declined to comment on the Journal report. Aisin, which also does business with General Motors Corp., Nissan Motor Co. and other automakers, had no comment other than to say it wants to maintain good relations with Ford.

Toyota's success in hybrids comes at a time when its profits are booming and its market share is growing around the world.

In contrast, U.S. automakers Ford and General Motors are in deep trouble. On Monday, GM said it lost $1.6 billion in the third quarter. Three days later, Ford reported a third-quarter loss of $284 million.

Rempei Matsumoto, who wrote a book on ecological auto technology, says hybrids are a must-have these days if automakers don't want to appear out-of-date.

"Everyone is concerned about the oil supply running out," he said. "The hybrid has been great for Toyota's image."

Even Toyota's rivals acknowledge that the company's head start gives it an advantage.

"They were there first," Larry Burns, GM Vice President in charge of research and development, said while in Tokyo for the Tokyo Motor Show, which opens to the public Saturday. "That's an advantage to have had real experience with real customers."

Toyota Executive Vice President Akio Toyoda, who oversees purchasing, sensed the tide turning on the doubts about hybrids earlier this year. Until then, the prevailing view was that hybrids are a tiny minority among the various options to reduce greenhouse emissions, he said.

"This year, we see the hybrid being treated as a very important option," Toyoda told The Associated Press.

Okamoto, Toyota's research executive, acknowledged the jump in hybrid demand was a pleasant surprise for the sales division.

"But from the start, we engineers believed in the hybrid's potential," he said.