Prius vs. Insight: A clash of corporate cultures

TOKYO--Few cars better embody the wide divergence in the corporate cultures of Toyota and Honda than these two hybrids.

In one corner is the Honda Insight--a case study in utilitarian expedience. It's powered by a simplified four-banger with an electric motor adding just enough oomph to cut down on trips to the pump. It sports a plasticy, no-frills interior and poaches parts from sister models.

In the other corner is the redesigned Toyota Prius--a paragon of engineering excellence. It pushes the envelope with an ingenious planetary gear transmission, outstanding fuel economy and snazzy options such as solar panels. The car that made hybrids famous carries a first-class sticker price to match.

For better and worse, the redesigned Prius and Insight exude the distinct corporate identities that gave them birth. The result is as much a battle of the automakers' business philosophies as a two-car rivalry.

Faultless Toyota Motors reached new technological heights but drifted into cost creep, a risky trend in a recession. Penny-pinching Honda Motors did a lot with a little, churning out a low-budget hybrid that can't match its rival's specifications.

Pricing policies

The redesigned 2010 Toyota Prius goes on sale in the United States in late May with a base price of $22,750, including freight. The price of the top-trim Prius will be $28,020. Later this year, a stripped-down base model will be offered for $21,750.

The Insight, by contrast, starts at $20,470 and climbs to $23,000, fully loaded. Toyota's aggressive pricing of the third-generation Prius may pressure margins again. Says Takaki Nakanishi, an auto industry analyst at JPMorgan: "It will be difficult to make a profit at the lower grades."

Honda and Toyota share a reverence for the principles of kaizen--or continuous improvement--and just-in-time manufacturing. But their subtle differences are best summed in Honda's pragmatism versus Toyota's perfectionism.

Pragmatism versus perfectionism

"Honda always has to prioritize what they can and can't do because they just don't have the resources of Toyota," says Tatsuo Yoshida, an auto analyst with UBS Securities in Tokyo. "If they tried to follow Toyota on development, it would be like committing suicide."

Take mileage. Honda was satisfied with a respectable EPA rating of 40 mpg city/43 highway for the Insight. But the Prius reached for and attained an eye-popping 51/48.

Honda got there by simplifying an existing 1.3-liter engine to two modes of variable valve timing, instead of three. It chose a one-clutch drivetrain instead of a two-clutch version. That reduced the efficiency of regenerative braking but was cheaper.

The lowest trim-level Insight lacks such staples as cruise control and stability control.

In aerodynamics, the Insight has a 0.28 drag coefficient. Good, but not even as good as the Honda Civic's. Yasunari Seki, the chief engineer, was ordered to poach body structure from the Honda Fit compact, a move that limited aerodynamic improvements and also resulted in ho-hum styling. In fact, attention to styling is such an afterthought at Honda that the company doesn't have a companywide design chief.

The pursuit of expedience is echoed in Honda's aversion to full-sized trucks and V-8 Acura offerings. Honda can't be all things to all people so it compromises with the car-based Honda Ridgeline and a V-6 Acura. They may not be best-in-class, but they leverage Honda's strengths.

"We believe it fits with the culture of our company, where we want to build environmentally friendly cars that get good gas mileage," says Dick Colliver, who retired recently as executive vice president of sales at American Honda Motors "You don't have to have a V-8 engine to be Tier 1."

High-tech luxury

Meanwhile, Akihiko Otsuka, Toyota's chief engineer, was striving to make his Prius the world's greenest car. The solution was cutting-edge.

Otsuka used a bigger engine to get better mileage at high speeds. He eliminated drive belts for the air conditioning compressor and water pump, making them electric. He devised an exhaust-heat recapture system to help keep the engine operating at optimal efficiency.

Otsuka also improved drag to 0.25, from 0.26. The new Prius was the world's slickest production car until Mercedes unveiled its new E-class coupe at 0.24.

The Prius brims with luxury features, most famously the gimmicky solar panels whose sole task is to run a ventilation system to cool the cabin when the car is parked in the sun.

Toyota's approach mirrors the whole-hog ambition that thrust it into the full-sized pickup segment with the Toyota Tundra and into premium sedans with the Lexus lineup.

"It's part of Toyota culture to always improve on what it's already done," says Chris Richter, of CLSA Asia-Pacific Markets. "It wants to position itself as higher end."

Honda re-engineered the Insight's hybrid system to cost 40 percent less than the previous-generation hybrid drivetrain, used in the current Civic Hybrid. Toyota was able to shave 35 percent off the costs of the current generation. But Otsuka missed the internal target of halving the cost.

(Source: Automotive News)