Honda starts selling cheap hybrid with Insight (in Japan), underpricing rival Toyota's Prius

"TOKYO (AP) -- Honda introduced Thursday the cheapest hybrid on market, starting at 1.89 million yen ($21,000) in Japan and under $20,000 in the U.S., hoping to turn around sluggish sales battered by the global downturn."

I'm somewhat confused why they would charge their own people more money. I'm assuming that the
1.89M yen = $21K exchange rate calculation in the article is correct.
(update, according to YahooFinance, as of today $1 = 89.77yen. Therefore, 1.89M/89.77 = $21,053)

Perhaps it is because the U.S. version does not come with a standard $1000 Hello Kitty iPod. (joke)
.

 

You shouldn't be surprised, the Japanese have been doing this for decades. The Japanese consumers are willing to accept subsidizing the export market and allow Japanese manufacturers to undercut (in price) rivals with the intention of eventually running their rivals out of business. Wonder whatever happened to the US Consumer Electronics industry (RCA, Zenith, Magnavox, etc.) and now all you see in US Stores are Asian brands - now you know. Of course, the Taiwan, Korean, and now mainland China have given Japan a taste of their own medicine.

 

Near as I can tell, we're looking at these numbers:

• +20% purchase - advantage big-Insight ($20k vs $24k)
• +20% operate - advantage 2010-Prius (40 MPG vs 50 MPG)

If you don't drive much, get the big-Insight. But if you are a road warrior, the Prius is the better buy. It comes down to "pay me now or pay me later." Buyer's are swift enough to pick the vehicle that best meets their expectations. It is an individual choice based upon their requirements.

Bob Wilson

 

2010 Insight - 175 width tires, 98 HP with whiny little motor ....

I'll pass.

 

I like the way Bob approaches the money question, but there is an implicit assumption here that the lifetime cost of fuel will equal the capitalization cost.

My rule of thumb would be that mostly highway drivers should pick the Insight, mostly city drivers the Prius, and people who do both in fairly equal measure should choose based on how long they typically keep a car, since the resale depreciation hit will inordinately affect the more expensive car for people who sell early.

'Course, most people will choose the car they 'like' more, and rationalize the rest. It's also possible that down payment demands will push people to the less expensive car.

Rybold: My experience is that a wide range of consumer items are cheaper in the US than the rest of the world. It's not just Japan, cars, or Toyota. A whole slew of factors are in play, including a volume market, competition, distributor efficiencies etc. E.g, care to guess how much it costs to warehouse a car until it is sent on to the dealer in Japan vs the US ? How about fixed dealer costs in Japan vs the US ? The only data point I found valuable in the Japanese pricing is the ratio, which I expect will carry over. It is 1.9/2.3, meaning the Insight is priced 82.6% of the Prius; or as I presume Bob did, the Prius is 1/.826 or 21% more.

 

The one thing not mentioned in the article is the quality of the ride and the amenities. The Insight II just is not in the same class as the Prius. It's going to 'feel' and 'drive' like a less expensive vehicle.

The whole 'is it worth it' discussion is not just $$$ and cents. The quality of the ride and the amenities have significant but subjective value. That can only be determined by actual driving experiences. As a seller of Prius' I encourage shoppers to drive the Prius and HCH back to back. Both are great but the Prius is just that much better and it becomes obvious quickly. The HCH costs less than the Prius so the decision is not always about money.

The Insight II is a step below the HCH!

Now OTOH there are a lot of buyers that have been excluded from buying either the Prius or HCH not to mention the TCH simply because they can't or won't spend more than $20000 on any vehicle. IMO these buyers will flock to the Insight II and sell it out. They know by limiting themselves to a vehicle priced under $20000 that they won't be getting the smoothest, quietest, more refined and feature-laden vehicle. That's OK. For this segment of buyers there is little value in 'nice'. 'Inexpensive' has the most value.

 

My take is that Honda still has not gotten the hybrid thing right (imm, Ford actually beats them!!) so i am not going to go first year on a completely new (sure its called the same as something offered a few years back but there is nothing at all the same about the old and the new) especially when its not really new. (its stats align with HCH after weight is considered).

but like i said, we need high mileage vehicles and there is a lot of brand loyalty for Honda, so if it gets another 25 mpg vehicle off the road, i am all for it, its simply not an option for me

and... if you can tell me what i meant by the above i would appreciate it because i am nearly as confused as Honda is

 

I am in complete agreement with DeadPhish. Insight II buyers will probably cross-shop with a loaded Corolla, non-hybrid Civic or even a used Prius / HCH.

 

If you look at the historical exchange rate of yen to dollar, the average is about 100 yen to 1 US$. The pricing should always base on the historical data and not at recent rates.

So 1.89 million yen ~= US$18.9K, I think this would be the price Honda would post.

Edit: After reading the Japanese press release, the 1.89m yen includes tax, so it is 1.8m yen without tax or US$18K.

 

Everyone has their own approach to buying and operating vehicles but mine follows this path:

1. What can I afford? - Determine the $ budget that I can afford for a vehicle. This gives me a list of vehicles and options to choose from including new and used. I like to look at used vehicles that have just passed or are at the end of their initial 3/36000 warranty period.
2. Which one can I afford to operate? - I then pick vehicles that match my expectations for minimum operational cost. This is when fuel and maintenance comes into play.

So I look at the Honda big-Insight as being somewhere between the BAS and HSD hybrids. More than a BAS but not quite an HSD, a type of hybrid trainer. If the big-Insight follows the pattern of the HCH, it will lead to a few more folks who decide to go HSD. I doubt there are many HSD folks who are tempted by the big-Insight as there is evidence to back this up.

Consumer Reports has studied owner satisfaction and the HSD hybrids have led the way for five straight years. The HCH has been well received but not the leader. In a year or so we should start to see how the big-Insight works for the owners.

Bob Wilson

 

But lower reving and a more refined drivetrain even back then.

 

Good point Bob. It will be interesting to see.

Oh, almost forgot... you may have to factor in the HCH-III to be released in 2011 as per usual clock work. If you recall, Honda will retain the HCH as their flagship hybrid platform... so a step-up from HI-II ownership will be somewhat assured within their Honda family.


Cheers;

MSantos

 

Honda Civic hybrid 0 to 60 mph time is over 13 seconds! That's pitiful.

 

Having driven a Honda Civic Hybrid I didn't find it lacking in power. Of course I drive a 2003 TDI that has a 0-60 of 12 seconds.

More to the point of this thread Edmunds has clocked the 2010 Insight at 10.9 second 0-60.

 

You mean the Prius from 10 years ago had a similar 0 - 60mph time to the yet to be released Insight? The trolls keep telling us Prius are slow!

 

I doubt I use much more than 50% of ICE taking off from red lights. What does that make my 0 - 60 ? 30 seconds ?

Today, for the first time since I bought the Prius, I had to either speed up or slow down fairly quickly. Since this is a Prius, I slowed down. The horror of it all.