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Toyota Looks to Parlay Prius' PC Cachet

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Cameron Diaz bragged about hers on The Tonight Show. Larry David's is regularly seen on HBO's Curb Your Enthusiasm. And in the wake of the Detroit Project's SUVs-equal-terrorism campaign, more showbiz movers and shakers are following their lead and showing off their politically correct Toyota Prius vehicles.

In fact, the must-have accessory in Hollywood this year is probably a hybrid power plant. And chances are the electrical/fuel combo that the beautiful people are driving is a Toyota, whose 120,000 global hybrid sales (from the Prius and three other models, one of which is only in showrooms in Japan) represent at least 80 percent of hybrid car and light- truck sales worldwide.

But competition is heating up. Honda has two hybrids in the U.S.—the Insight and a version of its Civic—and the domestics are rushing to launch their own models. Ford, General Motors and Chrysler plan to introduce as many as seven hybrids by 2006.

Toyota will debut a 2004 model Prius later this year, and to give it what one source described as "a big splash"—and to maintain its hefty lead in the category—the car maker has launched a global creative review, according to sources. "Hybrids are the future," said an executive who works on a car account.

Contenders include Toyota roster shops Dentsu, Publicis Groupe's Saatchi & Saatchi and at least one other agency, according to sources. Presentations are scheduled for the end of this month in Japan.

Toyota may decide to divvy up the work among several shops, a source said: "Toyota likes a mix of agencies. I wouldn't be surprised if they all get a piece of the action."

Toyota spent $30 million in the U.S. to launch the car in 2000, according to CMR, and about $15 million annually since then.

In the U.S., which represents 75 percent of the hybrid market (in Europe, high-tech diesel is favored), Dentsu's Oasis in New York handles creative, and Saatchi's Toyota office in Torrance, Calif., does media planning. Buying is out of Saatchi sibling Zenith Media, New York.

Most of the hybrid buzz revolves around the vehicles' two chief advantages: environmental friendliness and fuel efficiency. Honda calls its hybrid Civic the "ultimate expression of Civicness" because of that model's longtime environmentally friendly technology, said spokesman Andy Boyd. As for efficiency, the Prius gets 50 miles or more to the gallon. And if the anti-SUV movement makes an impact, the appeal of patriotism may add to the market potential.

For now, however, the Toyota and Honda hybrids account for only about 40,000 vehicle sales a year in the U.S., compared with the 4 million SUVs sold. "People remain committed to SUVs," said George Peterson, president of research firm AutoPacific. "It remains one of the most likely considered vehicle types in our research."

By 2006, as many as 25 hybrid models could total sales of 500,000 annually, predicts J.D. Power and Associates. Several of those models will be SUVs, including a version of the Lexus RX-330 and the Ford Escape. The latter will be in showrooms next year, said spokeswoman Sara Tatchio. "There is a segment of people who will put fuel economy at a high enough priority that there is a strong business case [for competing in the segment]," Tatchio said.

There is another consideration, noted Todd Turner, president of the consultancy Car Concepts. "Sixty percent of the focus on hybrids by car makers is political," he said, "and the rest is for marketing advantage. The Japanese want to say, 'We were here first, we have the technology,' a role reversal, since they are typically considered replicators, not innovators."