ToMoCo Alt Prop Guru A Half-Empty Kinda Guy
Bill Reinert was born in coal-miner's daughter country, worked in the engine rooms of Navy subs, survived a $6 pot bust and earned degrees in biopsychology and energy engineering from the University of Colorado. Reinert also serviced telephone towers in the Rockies, harnessing solar panels and windmills to charge batteries to conserve expensive, airlifted diesel fuel. After years of pitching his ideas to his [new] bosses at Toyota, Reinert helped design the Prius hybrid, and continues to work on hybrids for Toyota's US operation. As part of a lengthy "End of the Oil Age" feature on Bloomberg, Reinert reveals himself as a bit of a doomer, with well-worn predictions that we may descend into Mad Max territory. Framing Reinert's work, the Sierra Club complains that Toyota has moved backwards on being green. And the money men say trucks and SUVs are still ToMoCo's core business. "The company earns about $6,000 before taxes in the U.S. on an SUV," David Healy of Burnham Securities insists. "That compares with a $1,000 profit on a Corolla and a small loss on a Prius." Selling 181,221 hybrids may be impressive to outsiders, but if Toyota is losing money on each Prius… Is Reinert's baby still the way forward? That remains to be seen.
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Perhaps the Canadian Prius at $30k plus is doing some of the subsidizing, or is that where the price should be?
The overwhelming benefit to Toyota (even if the Prius isn't fully profitable): they've increased the costs of every other manufacturer (think GM)that is spending billions on their own hybrids. And the prospects of these other manufacturer's making a profit from their hybrids is really dim. Net result: once again, Toyota has increased their relative cost/economic advantage against the whole rest of the industry. This is a brilliant strategy, and the proof of the pudding is in their annual profits (about $15billion).
Maybe we should remind ourselves that GM spends 300-500 million on each of their ad campaigns? I seem to remember reading, not that long ago, that they were devoting another 400 million to pushing SUVs and small pick-ups, as a near emergency measure. Then consider the enormous goodwill benefit to Toyota of developing the Prius and the Hybrid Synergy Drive, and how that's placed the company in the limelight as an environmental innovator. Priceless.
"300-500 million" on each ad campaign... Maybe. I thought it was reported here that the campaign for the [s]Car We Can't Produce[/s] [s]Car We Can't Sell[/s] Car You Can't Ignore was $150 million. Maybe it costs more to sell a truck nobody wants than a car nobody wants.