Toyota: How the Hybrid Race Went to the Swift

As Toyota prepares to motor past Ford as the world's second-largest carmaker, it has become a textbook case on how a green reputation delivers a competitive edge.

Published: 19-Jan-2007

Toyota (TM ) not only makes more profit than any other automaker but also enjoys the best reputation for producing clean-running, fuel-efficient vehicles. Its gas-electric hybrid Prius is a public relations juggernaut and the centerpiece of a lineup with an average fuel efficiency of 28.9 miles per gallon, second only to Honda's fleet average. General Motors Corp. (GM ) and Ford Motor Co. (F ), which sell more pickup trucks and SUVs than Toyota, lag behind in fuel economy, with averages of 24.6 and 24.1 mpg, respectively, for their fleets.

As Toyota prepares to motor past Ford as the world's second-largest carmaker, it has become a textbook case on how a green reputation delivers a competitive edge. In the five years since the Prius' U.S. debut, Toyota's brand value has surged by 47%, to $28 billion, according to Interbrand. In the same period, Ford has been beset with numerous troubles, including a failure to meet its goals for SUV mileage gains or to exploit its well-regarded Escape hybrid. Its brand value fell 70%, to $11 billion.

How did Detroit blow it? More than anything, through inertia. For 20 years, GM and Ford earned outsize profits on supersize trucks and SUVs. And following the infamous failure of GM's EV1 electric car, a high-tech, high-cost econo-box seemed like anything but a good bet.

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