Toyota Motor Corporation: Launching Prius

Toyota Motor Corporation: Launching Prius – Study Questions:

1. What buyer value is created with the hybrid powertrain as implemented in the Prius?

- The biggest value is the added fuel efficiency of the vehicle. With the volatility of oil and gas prices having a fuel efficient car was a benefit for the buyer. As Hiroshi Okuda, President of the Toyota Motor Corporation stated: "Consumers are smart. They recognize the threat that pollution and global present to them and their children."

2. How attractive is the automobile industry? Does the hybrid powertrain technology make the industry more or less attractive?

- The automotive industry is a very attractive industry. There are not a lot of competitors. From what we've read, there are really about 12 real players in the automotive industry. Substitutes are subject to ones geographic location as well as socioeconomic conditions. So in markets where cars seem to be the major mode of transportation much of those economies and communities seem to rely on cars. Customers do have some bargaining power, but very little compared to other industries. And from the reading it costs about $750 million to $3 billion to develop a new car and powertrain, plus the marketing and distribution costs, as well as the capital needed to start in the automotive industry makes it very very difficult to enter.

- The hybrid powertrain technology makes the industry more attractive as it complicates the industry as a whole, creating another segment that participants would need to worry about. (?)

3. Why is Toyota pursuing the Prius project? What factors are important to