- The Washington Times - Tuesday, May 17, 2005

GEORGETOWN, Ky. - Toyota Motor Corp. rolled out plans yesterday to build a hybrid version of its popular Camry model at its Kentucky plant, marking the automaker’s first venture to produce a hybrid vehicle in North America.

Production is expected to begin in the second half of 2006, and company officials pegged initial output at up to 48,000 vehicles each year.

Toyota said it plans a $10 million investment in the Georgetown plant, its largest in North America, but said employment will increase by fewer than 100. The plant employs about 7,000 workers and can build up to 500,000 vehicles per year.

State officials and plant workers cheered Toyota’s decision.

Gov. Ernie Fletcher said Kentucky will be making the most technologically advanced automobile in America and that the venture could spin off more parts suppliers.

Hybrid production will take place on one of the plant’s two existing production lines, the automaker said. No new construction is planned. The $10 million will go mainly for equipment modifications and employee training.

Kentucky legislators passed tax legislation this year allowing carmakers to recover some costs of building hybrids, a move Toyota officials cited in announcing their decision. California and Canada also made a push to land the project.

Toyota said specific details about the Camry hybrid will be released later. Hybrid cars get better mileage than regular gasoline-powered cars because they switch back and forth between an electric motor and a gasoline engine.

Gasoline engines for the hybrid will be built at Georgetown, said plant President Gary Convis. At the outset, specialized components will be shipped from Japan, but the company wants to build a component network nearby, Mr. Convis said.

The 7.5 million-square-foot plant, which opened in 1987, currently produces the traditional Camry, Avalon and Solara models.

Besides the planned hybrid Camry, Toyota produces the hybrid Prius and Lexus RX400h hybrid sport utility vehicle. Next month, the Toyota Highlander hybrid midsize SUV goes on sale in the United States. A Lexus hybrid sedan is targeted for sale in spring 2006.

Toyota also said yesterday that it is investigating complaints about the Prius stalling. Jim Press, a Toyota Motor sales executive, said the company was checking into reports of about 13 vehicles with such problems. [The phenomenon has apparently been linked to defective software in on-board computers. Other Prius owners have complained that their cars wouldn’t start, and dealers could not determine why.]

The hybrid Prius has been a hugely popular model, with automotive experts saying it is the first economy car with a higher resale value than when purchased new.

Toyota officials predicted yesterday that hybrid production would spread and that hybrids — now just a fraction of the market — could someday represent the majority of vehicles on the road.

“Hopefully this will plant a seed, because the industry needs to go to this solution throughout all the products,” Mr. Press said.

Lindsay Brooke, analyst at CSM Worldwide, said Toyota may be overestimating the number of people who will pay more for a hybrid while gas prices remain less than $3 per gallon. Mr. Brooke said hybrids cost an average of $5,000 more than traditional models.

“Even though Americans have complained about gas prices, they’re still very low compared to the rest of the world,” Mr. Brooke said.

Mr. Brooke said hybrids have been selling for emotional reasons to buyers concerned about fuel efficiency and the environment. But hybrids are a tougher sell for customers who want a good return on their investment, because it could take them years to recoup any premium.

Hybrids represented less than 1 percent of the 17 million new vehicles sold in the United States in 2004. But the U.S. hybrid market has grown by 960 percent since 2000, when 7,781 were sold, according to R.L. Polk & Co., a Michigan firm that collects and interprets automotive data. Hybrid vehicle registrations totaled 83,153 in 2004, an 81 percent increase over the year before.

R.L. Polk analyst Lonnie Miller said hybrids could make up as much as 35 percent of the U.S. market by 2015 as long as automakers remain committed to producing them. But J.D. Power and Associates, another research firm, has predicted that hybrids’ market share will peak at 3 percent by 2010, as other fuel-efficient options become available.

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