Toyota delays opening of Prius plant

Toyota Motor Corp. said Monday that it will delay production at its factory in Blue Springs, Mississippi where it is planning to begin assembly of the Toyota Prius, the worldÔÇÖs best selling hybrid vehicle, because of a sharp downturn in industry sales.┬á┬á  The plant in Blue Springs was scheduled to begin making the Prius in 2010, marking the first time the gas-electric car was to be produced outside of Japan and China, but with US consumers seemingly unwilling to bite on any model in the industry, Toyota has put the Mississippi facility on the back burner.┬á  The Japanese automaker said it will finish construction of the plant, which is already 90 percent complete, but it will postpone the installation of equipment and delay production, attributing the decision as a reaction to the grim economic conditions. "With the U.S. auto market having collapsed, at this point it doesn't make sense to have the plant at all. Not even hybrids are selling well," said Tokyo-based analyst Christopher Richter for CLSA.┬á  At least one analyst thinks low gas prices might also be a factor, as this is not the first time Toyota has altered plans for the plant. Originally conceived to produce the Tundra, the automaker said in February 2007 it would spend $1.3 billion to produce its next generation Highlander SUV crossover. Once big cars lost their popularity in July, as gas and oil prices hit historical highs, Toyota moved assembly of the Highlander to Princeton, Indiana, and turned to the Prius. ┬á Gas prices have since fallen to an average of less than $2 a gallon in the United States, and Prius sales have declined.┬á There is a clear correlation, said Eric Fedewa, vice president and anylst at CSM Worldwide Inc., between gas prices and hybrid vehicle purchases. Partly because consumers pay more for hybrid vehicles than cars of equal value, and as fuel prices decline, it makes less financial sense for consumers to buy hybrids.┬á "I think anytime you are going to have a low gas price, people are going to revert back to earlier behavior," Fedewa said.┬á Toyota spokeswoman Barbara McDaniel said gas prices had nothing to do with the decision. "It's Toyota looking at all of its global operations now -- including new capital projects -- and is just in reaction to this steep downturn."