Why Toyota Delayed the All-New 2016 Prius

The Prius hybrid may not be Toyota's (TM 1.12%) best-selling model -- that would be the Corolla -- but it's arguably the company's most important.

It's not just that the Prius is the world's best-selling hybrid car, hands-down. In many ways, the Prius is a perfect example of everything Toyota does right: Cutting-edge green technology made accessible, easy to use, and reliable -- at a mass-market price.

That importance made it something of a surprise when reports started to emerge that the all-new next-generation Prius, originally expected next spring, has been delayed by months. What's the deal?

In this video, Motley Fool senior auto specialist John Rosevear digs into the reports and offers his take on the likely reasons behind Toyota's decision to delay the new version of its popular hybrid. As John notes, the new Prius isn't just likely to bring new hybrid technology, it's also the product of a pioneering way of designing vehicles that is brand-new for Toyota.

A transcript of the video is below.

John Rosevear: Hey Fools, it's John Rosevear, senior auto specialist for Fool.com. Interesting development with the forthcoming all-new Toyota Prius. Trade publication Automotive News has reported that the next-generation Prius has been delayed.

Toyota was originally aiming to release it next spring, but now it's apparently not coming out until December of 2015, and the plug-in version won't be out until October of 2016, more than two years from now. It's unclear why the car is being delayed. Toyota isn't saying, of course, most automakers absolutely will not talk about future products except in very specific circumstances. But it is known that the next Prius is going to include a bunch of new technologies that are critical for Toyota.

The Prius is of course the best-selling hybrid in the world, it's a massively important product for Toyota both because of the sales volumes and because it's a symbol of all the things Toyota does right, really, making a car like this at such an affordable price.

But Toyota is in the early stages of moving to a modular vehicle architecture and the new Prius is apparently going to be one of the first cars built on it. This is a different way of building cars, one that the Volkswagen Group (VWAGY -0.93%) has adopted with some success.

Most automakers use platforms, which are a set of common measurements shared between models, and architectures, which are sets of common parts, usually structural stuff that's under the skin. For instance, Ford's (F -0.19%) Focus and Escape are built on the same platform, they're very different vehicles, but they have enough in common that they can share a lot of common parts and can be built on the same assembly line.

What VW has come up with is a system where sections of a vehicle are modular, for instance a bunch of VWs and Audis might share the same engine compartment, the same structure in the front of the vehicle, which means that everything from critical suspension and frame parts to the plastic bottles that hold your wiper fluid can be shared among lots of different models, this simplifies designing a new model and gives a company even greater economies of scale with those particular parts. Toyota has said that it will move to a similar system, and apparently this all-new Prius is going to be an early test of it.

Toyota is also, as always, looking to make another big leap forward in their hybrid technology, Toyota is the world's hybrid leader and wants to maintain that lead. Toyota is said to be targeting a fuel economy improvement of at least 10% over the current Prius, which was introduced in 2009. Automotive News says that part of that gain is expected to come from a new gas engine, which is even more efficient than the very efficient four-cylinder in the current car.

So a delay for the all-new Prius, but it sounds like Toyota is hoping to make a big step forward with its next-generation hybrid. Thanks for watching.