Third Generation Prius to hit the Chinese market, but is there any hope for it?

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The third generation of Prius will hit the market via Shenzhen on February 22^nd this year, is Toyota trying to make a point by launching it in Shenzhen? Shenzhen is of course home to BYD, the plucky up start company that has come up against Toyota with Toyota inspired models and also aspires to be the biggest auto maker in the world by 2025.

In 2005 the second generation of Prius hit the production lines in Changchun at the Toyota-FAW joint venture, the car hit the market fast in early 2006, pricing was  high at 288,000rmb which was a good chunk of change back in 2006 and would put you in the front seat of some seriously nice V6 powered cars.  As predicted, Chinese consumers weren’t interested in a funny looking car that promised to save fuel, back then fuel was subsidized by the government and cost something like 4rmb per litre, fuel savings were the last things on anyone’s mind, Chinese consumers were living rich on the back of crazy export profits and were busy sinking cash into real estate. The second generation model stayed on the market from 2006 to 2010, in which during that period it sold less than 4000 units or just 111 units per month, but by 2010 it was barely selling a unit per month. In the early days the Chinese government was aware of the benefits of hybrid and new energy automotive systems but the consumer support for them was not there yet (and still isn’t)

7 years after the launch of the second generation Prius, the third generation hybrid is on its way back to China. But what has changed during these 7 years? Toyota has had the biggest change, the great recall of 2009 and 2010 made the company rethink its China strategy despite the recalls not effecting China in a great way, the company set up an R&D facility in Changshu City, Jiangsu and Toyota allowed Toyota China to run the country itself, rather than being run from Toyota HQ in Japan. These changes allowed Toyota China to modify its approach and methods with regards to the China market, the Chinese government has also warmed towards Toyota and its technologies, giving hybrids and other new energy vehicles substantial subsidies to get sales running.

How will the Third Generation Prius perform in China this time around? On all accounts it seems that consumer support for the vehicle is potentially there if Toyota can hit price points, the second generation failed owing to its high entry price if Toyota can bring it down to the 230,000rmb area as a locally made vehicle then there is no reason why it can do well. Subsidies are a tricky issue, as far as we know the Prius is not eligible for any subsidies in China as the engine is over 1.6L and cannot receive the energy efficient subsidies that are awarded to small efficient cars such as the Ford Fiesta, furthermore only hybrids in certain test pilot cities can receive subsidies towards their purchase and it seems that dealers in those cities are currently unclear on the correct procedure to making sure consumers get their monies worth.