Toyota Prius: A Case in New Product

Development
Presenters
Syed Khizer Ali Shah 13967
Murtaza Makati
12805
Naureen Ansari
8696

Toyota Prius: A Case in New Product

Developement

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INTRODUCTION
In 1997, TMC Japan launched its hybrid car, Prius in Japanese market
First mass produced hybrid vehicle
It consists of THS(Toyota Hybrid System) which combined an ICE with

electric motor
Goal of Ultimate Eco Car
Efficient and stylish
A safe car
A best selling hybrid car in 2002
Toyota Prius introduced in US market in 2000
Toyota Conducted research study for consumer preferences
Break successfully in tough US market
Worlds best engineered car by Automotive Engineering
International in 2001
Demand for hybrid cars because of unstable oil prices
Growing need for environment friendly product
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HISTORY

Toyota's history goes back to 1897, when Sakichi Toyoda (Sakichi)

diversified into the textile machinery business from his traditional
family business of carpentry.

Invented a power loom in 1902.

In 1926, Sakichi invented an automatic loom that stopped

operating when a thread broke.

In 1929, he traveled to the US and Europe to study the

manufacturing processes in car factories there.

In the early 1930s, Kiichiro convinced his father to launch an

automobile business and in 1933, Sakichi established an
automobile department within TALW.

In 1936, Sakichi sold the patent rights of his automatic loom to a

company in England to raise money to set up a new automobile
business.

Toyota Prius:
A Case in New Product
Kichiiro as a MANAGING
DIRECTOR

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HISTORY

TOYOTA, a new company, written with 8 brush strokes

Kichiiro visited US again to FORD to learn manufacturing

processes

Avg US worker productivity = 9 times of japenese worker

Introduced Just in time(JIT)

In 1950, a major strike by labour union moved Kichiiro

Eiji Toyoda as a new MD

Eijii travelled to US to study Fords River Rouge manufacturing

facility

Found some inefficiencies so introduced KANBAN system

In 1957, Toyota was renamed to The Toyota Company

Toyota Crown, 1st export to US

Received a boost in 1970, oil prices rose

Crisis in Japan, TPS helped to bounce back in 1977

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Power loom

Toyota Prius: A Case in New Product

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HISTORY

New United Motor Manufacturing Inc.(NUMMI), JV with GM in

80s

1983, name changed to Toyota Motors Corporation

In 1990s Toyota expanded its overseas operation

In 1995, Hiroshi Okuda became Toyota President

In 1999, Toyota listed its shares in NewYork and London stock

exchanges

Biggest Automobile company, in 2000

As of 2005,production bases in 26 overseas countries

Vehicle sales network in 170 countries and region

Employed 260,000 employees world wide

In 2005,Net revenue reached 18.55 trillion YEN

Net income reached 1.17 trillion YEN

Toyota Prius: A Case in New Product

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HYBRID CARS

Ferdinand Porsche manufactured the first hybrid-electric car in

1898.

In the 1960s a few attempts were made to manufacture hybrid

cars by applying turbine engines to the production of the
vehicles.

WHY HYBRID???

The need of cleaner and more efficient vehicles led to the

development of hybrid vehicles in the 1970s.

In 1970, Federal Clean Car Incentive (FCCI) was started by the

US government

The program was scrapped in 1976 by the Environmental

Protection Agency (EPA) of the US.

In 1993, another program called the Partnership for a New

Toyota Prius:(PNGV)
A Case in New
Product
Generation of Vehicles
was
launched
in the US that
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Developement
focused more on hydrogen-based vehicles.

HYBRID CARS
Toyota , more than 3 decades in hybrid car market
Sport 800, 1st ever hybrid car by Toyota in 1988 Tokyo
Motor Show
Sport 800; based on Series Hybrid System
Coaster Hybrid vehicle in 1997
In 2001, launched Crown hybrid and Estima Hybrid in
Japan
In 2002, FCHV (Fuel cell hybrid vehicle) technology was
introduced in the japanese market

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KNOWLEDGE
MANAGEMENT
Toyota's success
in both the local and global markets was
based on its gaining a competitive advantage through
implementation of innovative and path-breaking ideas on its
production floors.

Toyota had focused on learning from the very beginning.

Toyota, knowledge sharing was intertwined with its peoplebased enterprise culture, referred to as the Toyota Way.

The five key principles that summed up the Toyota Way were:
Challenge , Kaizen (improvement), Genchi Genbutsu (go and
see), Respect and Teamwork

Employees as Company's strength

Developing
mentoring

Toyota Prius: A Case in New Product

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TPS system worked
by combining
explicit,
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knowledge

human

recourses

by

training,

coaching

and

KNOWLEDGE
MANAGEMENT
all technical knowledge is transferred

Ensuring
workers at new plant

to the

Experts identified this knowledge sharing as major

contributor to their success
Quality Circles, Kaizan, Vendor Conventional programs etc
Performance measurement; Process v/s result oriented
Prius as benefits of knowledge creation
Beating the record of fastest development through out
the world
Production within 15 months, after both research and
development activities
Impressive whenToyota
Hybrid
technology was in a crude form
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KNOWLEDGE
They tried MANAGEMENT
only 80 hybrid engines and tested them to make a
final choice; Set based concurrent engineering

Changed the process of design finalization

Before; Chief engineer discussed with design and planning

department

After; Chief engineer discussed the design concept with design

and planning dept. along with production engineers

Important learning exercise for Young Toyota Engineers

RAV4 and Highlander; Worlds 1st mass market seven passenger

hybrid SUV

JIT, KANBAN, AUTONOMATION (Jidoka) e.g.. Andon, Poka Yoke,

SMED

Global Body Line; Flexible assembly line

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Original Prius
Drive by THS
THS,power train that combines engine with motor
Series/Parallel hybrid system
Power split mechanism
The Orignal Prius(NHW10) launched in Japan in Dec 10,

1997
Stylish, safe, four door, 5 seater seedan,
Quite and comfortable driving
Fuel effieciency is double with conventional car
52 miles per gallon in the city
45 miles per gallon on highways
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Original Prius
Most imp aspect??????
YES..It reduces the 80% of the smog-forming

emissions
Passive Safety Body Technology; seat bellts, air bags
and other equipments
Supplement Restraint Sysyem(SRS) in front and rear
seats
5.8 LCD monitor, displayed energy flow system,
navigation system
18000units sold in Japan in its 1st year
Japans Car-of-the-year Award in 1997-1998
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FIRST GENERATION : PRIUS

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FIRST GENERATION :
In 2000, Toyota introduced
its first generation model of
PRIUS
the Prius in the US, Europe and other markets. This
model was also called Prius NHW11 or Prius Classic.

Few modifications to meet vehicle standard for California,

USA
Engine HP from 58 to 72
Battery pack was changes to flat rectangular one from
Standard D
Touch screen LCD, eliminating hard buttons
Lighter, smaller and more powerful than original Prius
Compliance with SULEV (Super Ultra Low Emission
Vehicle) standard set by California Air Recourses Board,
Toyota Prius: A Case in New Product
dept. of EPA
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Toyota, marketing the first generation Prius in the US was

FIRST GENERATION :
The key was to convince
consumers in the U.S. that
PRIUS
hybrid technology was more than a science project.

Before introducing in US, Toyota conducted family demos

in Chicago, New york, LosAngeles, San Francisco and
Washington DC
Publicized by Internet
Well received by early adaptors and innovators who are
more tech savvy
SO, classified their costumers in this region i.e. early
adaptors, innovators and the early majority.
Toyota researched , US preferred trucks and SUVs
Also demand for luxury vehicles is rising up
Toyota Prius:
A Case in New
Product
Advertising through
internet
publically
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FIRST GENERATION :
Major concern; Price PRIUS
of a Car

Companys strategy;
Technology

Clean

Environment

and

High

USP(Unique Selling Proposition)

Same Price as of Original Prius
The company has sold about 1800 Prius cars through
internet even before the arrival of model at showrooms
For thorough evaluation, a full day test drive
Buzz marketing, an important reason for 1st gen Prius
success
Early adaptors and their word of mouth on internet
The websites talks about Prius in different versions,
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features, technology
and availability
Developement with pictures

FIRST GENERATION :
It got rave reviews from
Media
PRIUS

Celebrities like Leonardo DiCaprio, Cameron Diaz, Will

Ferrell, Bill Maher, Alexander Paul are some who bought
Prius
Leonardo DiCaprio said,I own a TOYOTA PRIUS; Its the
step in the right direction..
Company declared highly profitable product
15556 cars sold within 1 year in US and rose to 20119 in
2002
World wide sales rose to 100000 units by March 2002

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SECOND GENERATION :
PRIUS

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SECOND GENERATION :
PRIUS
Toyota began evaluating the popularity of its first generation
Prius in the market soon after it was launched.

The evaluation was based on the price, performance and social

aspects of the product as seen by buyers and potential
customers.

The most important feature of the new Prius was its enhanced
safety.

The company found the product needs some improvements in

terms of looks, quality and performance.

THS-II based on next concept; HSD(Hybrid Synergy Drive)

Low emissions and high power performance.

Engine runs on Atkinson Cycle; compression and expansion

stroke duration can
bePrius:
setA Case
independently.
Toyota
in New Product

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Prius 2004 or NHW20 launched in US market in April 17, 2003

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SECOND GENERATION :
PRIUS
Smoother driving experience.

Produces 76hp compared to 1st Gen Prius which produce 70 hp.

High developed electronic control system

Steering Assisted Vehicle Stability Control System(S-VSC) and

Intelligent Parking Assist system; both 1st in monitoring history.

S-VAC system integrates the VSC(Vehicle skid control),

ECB(Electrically controlled brake system),TRC (Traction control
system) and EPS (Electric power steering system).

60 miles per gallon in city.

51 miles per gallon on the highways.

5 doors car, wide cabin.

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SECOND GENERATION :
PRIUS

Electromultivision 7 touch screen monitor,

showing the energy flow, air conditioning and
audio system of vehicle.
SRS (Supplement Restraint System) safety
feature.

Advanced partial zero emission vehicle(AT-PZEV)

standards, reduced 50% CO2 and 90% reduction
in CO, hydrocarbons and nitrogen oxide.

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The Testing
125 safety tests carried out.
Uses Ultra high strength steel in vital places (2.5

times stronger than high strength steel).

8 air bags, knee protection panel, Child Restrain
System(CRS).
WIL(Whiplesh Injury Lessening).
The new Prius, 1st hybrid car tested by EuroNCAP
(European new car assessment program)
It is a safety assessment program.
EuroNCAP awarded Prius with 4 stars in child
protection & 2 stars in pedestrian protection.
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Marketing Strategies of Toyota

Prius in US:
Internet
Print Advertisement.
Television (National TV)
Radio
Celebrity Endorsement

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Outlook:
Edmon said: We are targeting a sales volume

of 36,000 for the first full year.

Price of $19,995.
By Oct 2003, more than 17,500 Prius has been
ordered in Japan.
By Sep 2004, more than 100,000 Prius car
were sold in US alone, while 244,000
worldwide.
Toyota introduced 2005 Prius at cost of
$21,275.
Toyota had about 300 patents for the original
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Prius and 370 for the new
Prius.

Toyota has share its hybrid technology with

Nissan Motors CO. Ltd.

Toyota won Excellence in Environmental
Engineering Award given by Sierra Club in
2000.
Won Car of the year award in 2004.
Won European car of the year award in
2005.
Aims to sell a million hybrid cars worldwide by
2010.
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