American-built Prius may be on hold

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

If reports coming out of Japan are true, it may take longer than expected before you can buy a Toyota Prius with ‘Made in USA’ stamped on it.

The Japanese business paper Nikkei reported that Toyota has decided to delay the start of Prius production in Mississippi from 2010 to 2011 at the earliest. The move was being made to save money at a time when Toyota, like other automakers, is suffering through a wrenching sales slump.

A spokesman for Toyota’s Torrance-based U.S. sales arm wouldn’t confirm the Nikkei report. Delaying the move is being looked at, spokesman Bill Kwong said, but no decision has been made.

Almost all Priuses are now assembled in Japan. Toyota planned to shift production of its Highlander SUV from Tupelo, Miss., to a plant in Indiana to make room for its first Prius assembly line in the U.S.

Through October, Toyota had sold 142,365 Priuses in the U.S. this year. The hybrids, which have the best fuel-economy of any mass-production car sold in the country, were in hot demand over summer as gas prices peaked at an average of $4.61 a gallon in California.

But a shortage of the nickel-metal hydride batteries needed to power the cars prevented Toyota from taking full advantage of the escalating demand. Then, as gas prices plummeted and the credit crisis took hold, Prius sales began to suffer along with those of other models and almost certainly will fall well short of Toyota’s goal of selling at least 175,000 units in the U.S. this year.

U.S. dealers now have a 21-day supply of Priuses, up from one or two days back in the frenzied days of June and July. That’s still better than Toyota’s 64-day average supply of passenger cars, but shows that even the Prius is at the mercy of the economics.

‘What we’ve seen in the past is that when gas prices go up, interest in the Prius goes up,’ said Jack Nerad, market analyst for automotive data tracker Kelley Blue Book. ‘And as gas prices go down, interest in hybrids overall, and the Prius in particular, lessens.’

The third-generation Prius is due to be officially unveiled at the Detroit auto show in January, although photos of the car have been circulating for weeks. The latest version is expected to be bigger and more powerful, and features an improved nickel-metal hydride battery pack. But fuel economy is expected to be only a few miles per gallon better than the 46 combined city-highway MPG of the current model.

—Martin Zimmerman