Image from: Prius Image / Shutterstock
Toyota launched the Prius in the US in 2000, making it the second electric hybrid on the market following in the footsteps of the Honda Insight. While the Insight’s quirky initial design didn’t set the world on fire, Prius was able to quickly achieve success in a burgeoning segment of the market that eventually would see competition, both directly and indirectly, from nearly every manufacturer racing to build a hybrid or plug-in electric vehicle. And now, an expanded lineup of Prius models, something no other manufacturer has done, is further evidence of Prius’ importance to Toyota.
Over the past few years, electric hybrids have become more prevalent as mainstream models such as Fusion and Sonata have hit the market, the Altima hybrid came and went and plug in electrics such as Volt and Leaf have come on board. These latter models, as well as Insight, have generally been considered key rivals to Prius’ dominance.
Given the changing hybrid electric landscape, Compete assessed model performance over the past few years, looking at demand performance of Prius and key rivals as well as cross-shopping interaction between models. This analysis leverages Compete’s proprietary and patented technology that monitors and normalizes the online behaviors of more than 2 million consumers each month.
Prius Continues to Dominate
Prius has always enjoyed a strong base level of shopper demand with ups and downs influenced by changes in gas prices – when gas prices spike Prius demand spikes and when gas prices recede to more typical levels, so does model demand. When the Prius Family of vehicles was introduced in Fall 2011, demand began to increase as shoppers now had more Prius options to choose from – the original Prius, the new Plug In, the Prius V and Prius C. Despite a decline in December – when demand market-wide is typically lower – Prius demand has trended higher since the new product launch, peaking at approximately 75,000 shoppers in March 2012. The new models expanded Prius’ reach and widened its advantage versus key rivals.
Insight, Volt and Leaf all trend at about one-third of Prius demand. While each has seen some improvement in 2012, likely influenced by spillover demand from the growth in Prius, they all have continued to trend well below historic and launch highs.
While Insight has historically trailed Prius, Volt came out of the gate strong, challenging Prius for demand leadership in Q4 ‘10/Q1 ’11. Volt has since settled in to a level of demand consistent with Insight at approximately 20,000 per month. Leaf gradually ramped up demand behind significant marketing support but has never really challenged Prius, settling in just below Volt and Insight.
Prius is a “Must Shop”
Rival electric/hybrid electric prospects prominently shop Prius. Insight, Volt and Leaf prospects all shop Prius among their top 5 other models shopped on a regular basis, with many months shopping it #1. Essentially, Prius is a “must shop” when shopping for a competitor, perhaps to compare technology, fuel economy, styling or price. The fact that Toyota now offers a Prius in a variety of price ranges ($18,000 for the C to $32,000 for the Plug In) likely has driven competitive interest since there is now a version to compete with the higher priced rivals (Volt, Leaf) as well as a lower priced model to compete with the broader market.
Instead, Prius prospects are more likely to shop compact and mid-size sedans, many of which also offer a hybrid or a diesel – Civic, Focus, Sonata, Jetta, Passat. Because of Prius’ longevity, and its mainstream acceptance, it is shopped against other mainstream models, likely with an eye toward fuel efficiency. In any event, hybrid electrics and plug-ins have not consistently penetrated the cross-shopping set of Prius prospects which in turn has limited their impact in the marketplace.
What Can the Industry Learn From Prius?
As electric and hybrid technology advances and more alternative fuel vehicles are produced, Prius can serve as a role model for success. The name itself has become almost synonymous with “hybrid” and as a result it’s the first name that comes to mind when in the market for a vehicle of its type.
- Compare the extent to which hybrids/electrics are halo products for the rest of the brand. Unlike Prius which stands on its own as a brand, Volt and Leaf are used to highlight technology. Does that have a spillover effect on other models in the portfolio?
- Understand the contribution provided by hybrids and how that differs from gas vehicles, especially those models that offer both (Civic, Fusion, Focus).
- Does the hybrid version attract a different type of shopper? Does it expand the competitive set of the model and brand?
- Understand how prospects shop gas versus hybrid/electric models. For example, do they use different shopping tools? Are they likely to shop both or do they shop one versus the other?
Insights into consumer shopping behavior can help answer these questions and can help manufacturers develop strategies to more effectively market new technology and, more importantly, establish their models in the competitive and ever growing environment.
Dennis Bulgarelli is a Client Services Director at Compete. At Compete Dennis is responsible for advising auto clients on trends in consumer online shopping behavior. Before Dennis joined the Compete team he did research and planning at most of the large ad agencies. Dennis hopes to one day, drive cross- country on the blue highways. Follow Dennis on Twitter @dennisbul or connect with him on LinkedIn at http://www.linkedin.com/in/dennisbulgarelli.