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Toyota Plans Prius Plant in Mississippi

Company can't keep up with surging hybrid demand

By Joe Benton
ConsumerAffairs.com

July 10, 2008

Toyota says it will convert its Tupelo, Miss., plant to produce Priuses by late 2010, scrubbing a plan to make the next-generation Highlander crossover there.

Instead, Toyota says it will make the Highlander at its Princeton, Ind., truck plant, which is running below capacity.

The company said it would also suspend all production of Tundra pickups and Sequoia SUVs from Aug. 8 until November.

Gasoline prices over $4 have consumers lining up for the popular hybrid but Toyota production of the car is so far unable to match the increased demand. Supply of the Prius is so limited that sales of the hybrid declined in May by 37.5 percent to 15,011 units as compared with 24,009 in May 2007.

It was just a few weeks ago that a Toyota spokesman was telling reporters that a second supply and production network would be cost prohibitive for the automaker, according to the spokesman.

The global manufacturing capacity for the Prius is currently 250,000 units or about 21,000 per month with the automaker allocating roughly 15,000 per month for sale in the U.S. That means Toyota will ship between 170,000 and 180,000 Priuses here this year, the same number as in 2007.

Some Toyota dealers are cashing in on surging demand for the popular Prius hybrid in the face of tight supplies of the little car.

One recent Prius buyer reported paying a $5,000 premium for his hybrid.

"I feel a little better now," retorted a proud new owner of a 2008 Prius. "The dealer raised the price $5,000 over MSRP."

In the world of $4 a gallon gasoline and many thousands of dollars in hybrid premiums, some potential Prius consumers still cling to hope.

"I finally convinced my husband that we need a Prius only to find that wait lists are back," said a Prius shopper in Washington, D.C. "I don't mind waiting as long as we don't have to pay over MSRP. The dealerships I've talked to so far have all quoted me between $1,500 to $2,500 over MSRP. Anyone paid below MSRP in the past few weeks?"

Probably not, at least in the Washington, D.C. metropolitan area. A Prius owner from Long Island advised waiting until 2009.

"My due date is June 23 but I could deliver early according to the salesman," responded another. "I have my primary and secondary routes planned from home and office to the credit union where delivery is planned," she said.

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