European carmakers race to catch up as Toyota shows off new Prius

Facing tougher emission standards, European automakers are rushing to roll out hybrid cars, but they face an uphill battle to catch up with Toyota which popularised the technology 18 years ago.

The Japanese giant will be showing its latest Prius -- the fourth edition since 1997 -- at the IAA motor show in Frankfurt this week.

Almost two decades ago, few expected the car with a complex technology combining a petrol engine with battery-powered generators to become a hit.

In fact, the concept is not new, and Porsche lays claim to the first petrol-electric car prototype built by its founder as early as 1900.

But it is the Japanese giant that has managed to popularise the technology, first with 17,600 units in 1998, before sales exploded with its more spacious second-generation Prius.

Today, the car has become a symbol of environmental responsibility and Toyota's rivals, including Honda, Nissan, General Motors and Ford, have jumped into the game.

However, Toyota has enjoyed a substantial lead, having already sold more than eight million hybrids.
The Prius is by far the top-selling new car in Japan, where the hybrid market makes up close to 40 percent of total sales.

By comparison, hybrids make up just three percent of the US market -- and the share is shrinking with dropping petrol prices.

The hybrid has also remained a largely marginal affair on the other side of the Atlantic.

But it is slowly "starting to find a market because the cost equation is starting to balance out for some consumers," said Francois Jaumain from PwC.

Notably, several European governments offer subsidies or lower tax rates for owners of hybrid or electric vehicles.

Toyota hopes to double its sales in Europe to 400,000 units by 2020, the Japanese group's executive vice president Didier Leroy told AFP.

- German carmakers join race -

Flavien Neuvy, who heads the Cetelem observatory on automobiles, added that consumers feel more confident about hybrids because, unlike with fully electric vehicles, drivers are less worried about being stranded at the side of the road given the petrol backup.
He believes that hybrid sales in Europe could rise to 10 percent of total volume.

Europe's latest emissions standard -- Euro 6 which took effect September 1 -- has also made hybrids more attractive as it will increase the cost of running cars powered by polluting diesel fuel.

In addition, car markets are required to meet the EU target of 95 g/km of CO2 emissions by 2020, giving them further incentives to find greener solutions.

According to a study by credit insurer Euler Hermes, Germany is currently trailing with average emissions of 130 g/km in 2014, dragged down by luxury energy guzzlers, while France has recorded 112 g/km.

The German auto industry is therefore pumping "massive investments into hybrid and electric technologies", the study said.

That is on full display at the Frankfurt show.

BMW is showcasing its new rechargeable hybrids, while rival Mercedes-Benz expects to launch 10 models by 2017.

Volkswagen already has one hybrid version of its best-selling Golf line.

Audi and Porsche too are in the race.

Absent for now, however, are the French makers.
PSA Peugeot Citroen, whose high-end diesel hybrids have so far failed to gain traction commercially, has indicated that it will launch hybrid gas-electric cars by the end of the decade.

Renault meanwhile is banking on electric cars.

It has so far not produced any hybrids although its chief executive Carlos Ghosn said he does not rule out the possibility that its recently presented Talisman line would one day be hybrid.