Prius Bright Spot for Toyota in May, Despite Falling Gas Prices

Toyota Motor Sales U.S.A. Inc.’s Prius hybrid-electric vehicle enjoyed a 41.2% increase in sales in May, and, despite falling gas prices, the car should continue to do well in coming months, a company official says.

“Our short-term forecast is we expect some stability in fuel prices, without spikes or decreases, one way or another,” Bob Carter, group vice president and general manager-Toyota Div., tells media in a conference call to discuss May sales. Traditionally hybrid sales have fallen in lockstep with lower gas prices.

Carter admits the spike in Prius sales looks better than reality because Toyota a year ago was launching the HEV’s third-generation model and was short on supply. The Prius currently has a 40-day inventory. The 20,000 units in dealer stock is the sweet spot Toyota wants to maintain for the car.

Carter says Prius sales in January and February were “challenged” by negative media attention regarding a recall for the car, but now “consumers are returning back to the showroom, and we’re pleased. Prius came in 6% ahead of what we had planned for the month.”

Toyota, as expected, posted one of the smaller increases in U.S. sales in May, up 6.7% on a daily rate and volume basis. There were 26 selling days this May as well as year-ago. In comparison, Ford Motor Co. sales rose 22.0% and Nissan North America Inc.’s climbed 24.1%.

Most analysts point to the waning effect of Toyota’s incentives, introduced in early spring following fallout from recalls, for its weak May performance. Carter somewhat agrees with that.

“The promotions continue to be very effective. But as with any promotion, effectiveness does run its course,” he says, while noting Toyota has been the No.1 selling retail brand in the U.S. for the last three months.

The auto maker plans to continue 0% financing and low leases for select models, as well as two years’ free maintenance, but it now is transitioning the deals to ’11 models.

Prius sales rise 41.2% in May.

As planned, Toyota also is shifting its marketing message toward safety and quality and away from cut-rate deals, with a new ad campaign featuring company engineers beginning shortly.

Lexus Div. sales largely are credited for Toyota’s positive May results, up 31.3% compared with 3.6% for the Toyota Div.

Lexus volume models, the ES sedan and RX cross/utility vehicle, both recorded strong results, with deliveries rising 24% and 22%, respectively.

Thanks to a recent revision, the relatively low-volume Lexus GX SUV posted the largest sales hike year-over-year for the luxury brand in May, up 111.5% to 1,413 units. The LS 600h hybrid-electric sedan suffered the marque’s biggest decline, sliding 70.4%, Ward’sdata shows.

The Prius accounted for the lion’s share of Toyota’s passenger-cars deliveries in May, with the Corolla posting the second-highest jump of 20%, Ward’s data shows. However, sales of Corolla’s platform-mate, the Matrix hatchback, tumbled 31.7%. The Yaris subcompact also continued to struggle in the month, with sales plunging 58.5%.

Overall, Toyota Div. car deliveries, which included the Scion brand, rose just 1.5% in May.

Light-truck sales were more robust, up 12.5% due to a 245.3% increase in deliveries of the 4Runner, which recently was redesigned. Also refreshed and doing well is the Sienna minivan, with sales spiking 49.7%.

Even the aging FJ Cruiser SUV saw sales climb 64.6%. Deliveries of the closely watched Tundra fullsize pickup rose 32.4%.

Carter says Toyota is adjusting its production mix more toward trucks and SUVs, as consumers are returning to these segments more quickly than anticipated.

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