Toyota's Prius, a niche oddity when it went on sale 15 years ago, jumped to the world's third best-selling car line in the first quarter as U.S. demand and incentives in Japan turned the hybrid into a mainstream hit.
Prius sales more than doubled as Toyota extended the name to a four-model family of vehicles at the same time that rebates and tax breaks in Japan are saving buyers the equivalent of $2,500 or more. In the quarter, sales soared to 247,230, trailing only Toyota's Corolla, at 300,800, and Ford's 277,000 Focus sales.
The Prius surge, after two years of recalls and production disruptions, propelled Toyota back into the global sales lead for the first three months of the year. The hybrid line also gives the Toyota brand three of the top 10 models in the United States so far this year, including its midsize Camry.
"It proves Prius wasn't a fluke, that there's a long-term market for hybrids," said Eric Noble, president of the Car Lab, an automotive consultancy in Orange, Calif.
In the aftermath of last year's earthquake and tsunami, which cut parts and auto production for Japanese carmakers, the government in December began encouraging purchases of fuel-efficient autos to reverse sagging domestic deliveries.
Rebates of as much as $1,258 are available from a $3.7 billion fund for qualified cars, including the Prius hatchback, wagon, plug-in and Aqua subcompact, sold in the U.S. and elsewhere as the Prius c. Tax savings further reduce the purchase price by another $1,257 or more. The average price for a Prius in Japan is about $31,400 and around $25,000 in the U.S.
Aqua has become the car of the moment in Japan, helping to more than triple Prius family sales in the country to 175,080 in the first quarter, from 52,507 last year. While funds for the rebates may run out in July if the government doesn't extend them, the tax reductions continue through 2015.
"It was good that introduction of Aqua and the start of government subsidies happened almost at the same time," said Koichi Sugimoto, senior analyst at BNP Paribas in Tokyo. He added that there's more to the success than the government incentives.
"Toyota is introducing good vehicles and assuming it will maintain a certain volume even after the subsidies end," Sugimoto said.
The Prius line topped other high-volume car models including Hyundai's Elantra, Volkswagen's Golf, Ford's Fiesta, General Motor's Cruze and Honda's Civic, according to the companies.