Despite Prius' slowing sales, its hybrid DNA is thriving

It may still have one of the highest mpgs on the market, but after 20 years in the U.S., the vaunted Toyota Prius may be running out of gas.

Once a leading symbol of environmental activism, the formerly ubiquitous egg-shaped hybrid has seen U.S. sales decline for seven consecutive years. It's suffering another sharp drop this year.

Though they won't declare it outright — Toyota rarely gives up on anything, let alone something it invented — executives look like they're starting to consider a North American lineup without a Prius in it, even as the automaker's pioneering hybrid technology continues to blossom under different Toyota and Lexus top hats.

The Prius "is viewed by consumers not only as our eco-leader, but also as a technology leader," said Bob Carter, head of sales for Toyota Motor North America, who says the company has "no plans to sunset" its pioneering hybrid.

"But we're in the fourth generation of Prius now," Carter continues, "and if you ask me whether there will be a fifth generation? I have no comment."

Prius sales peaked in the U.S. in 2012 at 236,659 before tumbling to 69,718 last year. So far this year, the hybrid has suffered a COVID-assisted 35 percent drop, racking up just 32,566 sales through September.

A number of factors have pecked away at the Prius' popularity. It's a sedan in a market now dominated by crossovers, SUVs and pickups. A global oil glut has kept fuel prices low for years. Some governments have favored full-electric vehicles that produce no tailpipe emissions over hybrid vehicles that dramatically reduce them.

But most Toyota dealers need only look inside their own showrooms to see where Prius customers have gone: to the hybrid models across the lineup. The brand's hybrid sales are up 11 percent so far this year, even with COVID-19 hurting overall demand. They now account for more than 1 of every 7 Toyotas sold in the U.S. — and usually at higher transaction prices.

Last year, the RAV4 Hybrid outsold the Prius for the first time: 92,525 vs. 69,718. And by the end of this year, the brand will sell the Prius alongside seven other hybridized vehicles — the RAV4, Highlander and Venza crossovers, the Corolla, Camry and Avalon sedans and the Sienna minivan. This quarter, the redesigned Sienna will become the eighth vehicle in Toyota's lineup with a hybrid powertrain, joining the Prius and Venza as hybrid-only vehicles in the U.S.

"We're in the customer business, and if customers prefer an SUV body, well, we've got to serve the customers," Carter said.

The Prius' journey in the U.S. began in 2000, three years after it debuted in Japan. The first-generation model, underpowered and unlike anything on American roadways at the time — save for the slow-selling Honda Insight — sold in small numbers.

But sales more than doubled in 2004 to nearly 54,000 after the introduction of the second generation. They doubled again in 2005 as environmentally conscious consumers and a slew of celebrities embraced the fuel-sipping powertrain and the green message the unusual body proclaimed on the nation's roadways and in its driveways.

"If everybody that had two cars had a Prius instead of an SUV, we wouldn't be in the Middle East right now," actress Meryl Streep once proclaimed.

The Prius' popularity pushed Toyota to try to expand its environmental subbrand, beginning in 2011 in the U.S. with the Prius v and Prius c. The additions helped push Prius sales to their U.S. peak in 2012, but the boost proved temporary. While the environmental message still resonated, falling fuel prices tempted consumers to look at light trucks. And when startup Tesla began offering its Model S, environmental advocates suddenly had a new, shinier status symbol.

In 2016, Toyota added the Prius Prime plug-in hybrid in the U.S., but the Prius continued its downhill roll.

"In some respects, the Prius did what it needed to do, which was introduce the general public to the benefits of a hybrid powertrain," said Stephanie Brinley, principal automotive analyst for IHS Markit. "But now, you don't have to have that odd shape to have a hybrid powertrain."

In 2017, the automaker announced a new plan to offer hybrid or electric vehicles across its lineup. For 2020, both the hybrid Camry and Corolla sedans are rated at up to 52 mpg combined — close to Prius' 56 — while the RAV4 Hybrid carries a 40 mpg combined rating.

Last year, the Toyota brand sold 230,889 hybrids in the U.S., up 26 percent from 2018. Toyota dealers have long appreciated the Prius and the customers it brought in, said Robby Findlay, director of operations at Findlay Automotive Group in Henderson, Nev., and chairman of the Toyota National Dealer Advisory Council.

"I think dealers would still like to see Prius be the industry innovator it once was, but we also understand that having a hybrid in every model now has been a game changer," Findlay said.