In U.S. hybrid battle, Insight starts slowly while Prius gains steam

It's a good thing the redesigned Honda Insight is surpassing sales expectations in Japan, because its debut in the United States has been a disappointment.

Despite a major advertising campaign and the Insight's $2,000 price advantage over the redesigned Toyota Prius, U.S. consumers are not embracing Honda's new hybrid.

"Both are great cars [but] Prius is greenspeak for 'hybrid,'" said David Wilson, president of Wilson Automotive Group in Orange, Calif., which has both Honda and Toyota franchises.

Honda had hoped to sell 90,000 Insights a year in the United States, but the sour economy forced a revision at the time of the hybrid's March launch, to 60,000 units. So far Honda is off that pace, with only 7,524 sales through June. By contrast, Toyota sold 55,751 Priuses from January 1 through June.

TNS Compete, a marketing consulting firm in Boston, says it tracked 70,700 Prius shoppers in June and found that about 13,000 bought a Prius. Lincoln Merrihew, TNS' managing director, described the 18 percent conversion rate as healthy.

By contrast, TNS reported that about 40,000 Insight shoppers in June bought only 2,079 vehicles, a conversion rate of about 5 percent. Merrihew called that a typical ratio for a new-vehicle launch.

Wilson said: "Prius is also the most visually hybrid-looking of the two. If you are trying to make that environmentally conscious statement, Prius will be your first choice."

Another multiline dealer with Honda and Toyota stores said: "There is no cross-shop between Prius and Insight. Prius buyers come in on the Prius and buy a Prius. Honda buyers come in on Insight, find it a bit small and move to a Civic Hybrid. It will take time for Insight to catch up with the level of awareness and purchase intention that Prius has built up over several years."

Still, the dealer said, at least one of his Honda stores is "selling every Insight they get and needing more. I think relatively low gas prices and the low level of awareness are the biggest issues for Insight right now."

While the Insight is struggling to find its footing in the United States, its Japanese launch has gone well. The original Japanese sales target was 60,000 a year. But Koichi Kondo, an executive vice president at Honda Motor, said the Insight is on pace to reach 100,000 sales in the fiscal year that ends next March 31. Honda sold 36,457 Insights in Japan from its February 6 launch through June.

The third-generation Toyota Prius hit the Japanese market on May 18. Toyota sold 21,200 Priuses in June in Japan.

Honda Motor spokeswoman Yasuko Matsuura said the company is not deliberately holding back exports of the Japan-made Insight. She blamed disappointing U.S. demand on overall market conditions, not competition with the Prius.

Sage Marie, a spokesman for American Honda Motor, said it is too early to call the Insight a hit or a flop in the United States.

"We're still building awareness," Marie said. "We're just a few months into a launch of an all-new product. We still want to sell 90,000 Insights. Are we going to do this the first year? Probably not."

(Source: Automotive News)