Even Mighty Toyota is Troubled, But Promises Growth with New Hybrids and Batteries

It was sobering to learn that the financial crisis that has paralyzed the domestic auto industry has now spread to Japan, where Toyota is projecting a $1.66 billion operating loss for the year that will end in March. This is a company that made $25.2 billion last year. Honda is also revising its sales projections and profit figures downward.

Management shakeups are also in the offing at Toyota, and the grandson of the founder is under consideration for the presidency. (This has echoes of William Clay Ford, Henry’s great-grandson, riding in as the white knight chairman in 1998.)

Two thousand nine will undoubtedly be a tough year for Toyota, but its losses pale compared to Detroit’s. And the company is in a good position to lead a repositioned, leaner and greener auto industry.

The 2010 Toyota Prius reportedly looks like this.

Toyota will offer some impressive new products at the Detroit Auto Show in January, including an all-new Prius (still with nickel-metal-hydride batteries). Styling is an evolution rather than a dramatic change, but the nose is more angular. Early indications are that the car is going to be slightly bigger (three inches in length, and one in width), with the engine growing from 1.5 to 1.8 liters. It will have a higher top speed, and some sources say a 10% fuel economy improvement. That’s a neat trick -- bigger, but with better mileage.

Toyota spokesman John Hanson says that Toyota will also be debuting a “dedicated” Lexus hybrid, the HS 250h, in Detroit, and according to Japanese sources it will have nickel-metal-hydride batteries (later to be replaced with lithium-ion in 2010) and a 2.5-liter gas engine, possibly a V-6. My guess is that this combination will not yield Prius-killing fuel economy numbers.

Lexus already has two hybrid sedans, both of them performance rather than economy cars, so I’m not sure why it needs another entry there. Honda is making a smarter move with its new Insight hybrid, which is designed to sell for under $20,000, with better fuel economy than the combined 42-mpg Civic Hybrid. That car will debut next spring.

Also very cool from Toyota is its ultra-compact iQ, which has unique four-passenger seating (one of the quartet has to be a child). The cute-as-a-button iQ is on the market in Japan, and could come here if the company is convinced there’s a market for it.

A Japanese magazine displayed this possible design for the Lexus HS 250h.

Finally, Toyota is bringing out its plug-in hybrid car. That car, with lithium-ion batteries, will be offered to fleet customers in Japan, Europe and North America in late 2009. Toyota is seriously into batteries, and Hanson points out the company owns 60% of a Japanese factory in partnership with Panasonic, and is building a second plant. By 2010, Toyota will be able to produce a million battery packs annually. Conventional Toyota hybrids are so far sticking with generally reliable nickel-metal-hydride batteries, he said.

“The rosetta stone is the battery,” Hanson says. “We’re now looking beyond lithium, and we think we’re further along than anybody. We have a million hybrids out there already, and we’re concerned about customers’ durability expectations when we introduce any new battery technology.”

So Toyota is wounded, but the medical team is positioning it for a full recovery.