Lexus Plows Into Hybrid Territory

Luxury carmaker plans an eco-friendly SUV.

Published: 08-Jan-2003

ONG>DETROIT Toyota Motor Corp. announced Tuesday that it would start selling a hybrid version of its Lexus RX 330 sport utility vehicle in two years, which will probably make it the first luxury automobile to use the highly fuel-efficient technology and the second such SUV on the market.

The plan was part of a flurry of announcements at a preview of the North American International Auto Show in Detroit this week relating to fuel-efficient technologies. Which technology was being talked up, however - hybrids, diesels, fuel cells, hydrogen combustion - depended which automaker was doing the talking.

European executives, used to wide acceptance of diesels in their home markets, stressed the need for wider acceptance of diesel in the United States.

On Monday, General Motors unveiled a new plan that includes offering in 2005 a version of its Saturn Vue SUV, which uses hybrid technology - a fuel-efficient combination of an internal combustion engine supplemented by an electric motor. The company also plans to offer milder forms of electric power in four other high-volume models by 2007.

Ford Motor Co., which plans to sell a hybrid version of its Escape SUV in December - likely the first hybrid SUV - showed a new prototype at the auto show that uses hydrogen to fuel an internal combustion engine and supplements it with electric power.

All the major automakers are working on electric cars powered by fuel cells that do not need to be plugged in because they generate an electric current from a chemical reaction.

The frenzy of public relations on fuel efficiency in the U.S. market are largely a response to increasing regulatory and social pressures.

Last month, the Bush administration said it planned to increase federal fuel-economy standards for pickups, SUVs and minivans by 7 percent, a minuscule increase from the perspective of environmental groups but still the largest increase in more than a decade.

California, highly influential in the debate because it sets its own clean-air standards that other states follow, has passed legislation to reduce automotive greenhouse gas emissions.

Since the late 1990s, Toyota and Honda Motor Co. have been the only two car companies that sell cars that use hybrid power.

Toyota sold more than 100,000 of its Prius subcompact hybrids since they first went on sale in Japan in the late 1990s and Honda offers a hybrid version of its Civic and an aluminum hybrid called the Insight.

"Major advances in our hybrid system and in the number of vehicles carrying it will help us achieve our worldwide goal to put 300,000 hybrid vehicles on the road annually by the middle of this decade," said Fuji Cho, president of Toyota Motor. "More importantly, it will spread advanced, low-emission technology faster and further around the world."

Dieter Zetsche, the chief executive of the Chrysler Group, a unit of DaimlerChrysler AG, said Monday he still had considerable doubts about the business case for hybrids. Government tax incentives are seen as key to their immediate promise. Modern advances in diesel engines, Zetsche said, were more promising.

His company plans to start selling about 5,000 diesel versions of its Liberty SUV in 2004.

Chrysler's corporate cousin, Mercedes, said Monday it would offer a limited amount of diesels on the company's E-Class sedan in 2004.

Cars for the ultrarich

The latest in a bumper crop of new models aimed at the ultra-rich is a 1,000-horsepower prototype from the Cadillac division of General Motors Corp., the Sixteen, which was shown Sunday night at the auto show in Detroit, the New York Times reported.

The car looks like a cross between the Batmobile and a Rolls-Royce, and GM said it would be the first 16-cylinder engine made since the 1940s - if GM decides to make it.

The car is a pet project of Robert Lutz, the former president of Chrysler Corp. who now is vice chairman of product development at GM and who says the Cadillac brand has been undermined by blandness. The Sixteen's amenities include silk carpets, walnut inlays and a two-piece hood that opens up like a Faberge egg, with wings unfolding to reveal a jewel-like engine.

"It seems to trigger powerful emotions," Lutz said. "It's all about re-establishing Cadillac as the standard of the world and providing a tangible vision to the outside world and ourselves of what we want Cadillac to become, so it becomes almost a religious symbol of our belief in Cadillac and what we want it to be."

But will cars that cost several hundred thousand dollars be worth the effort for a company that has a hard time competing with the Honda Civic? And how many cars can wealthy automobile aficionados such as P. Diddy and Donald Trump afford?

The industry seems intent on finding out. At the auto show, the all-frills cars were out in force. They included the Phantom, the first Rolls-Royce produced by the company's new owner, Bayerische Motoren Werke AG; a "cheap" Bentley from Volkswagen, the Continental GT, which will cost about $160,000 when it goes on sale this year, and the Maybach, DaimlerChrysler AG's first foray into the segment.

"There has been a market there, but the more you glut it, the harder it becomes," said Efraim Levy of Standard Poor's. "Right now, that market can't keep up with the stock market."

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