Patriotic consumers bent on "buying American" whatever the cost are about to find that life has become more complicated. According to numerous reports over the past few weeks, two Japanese automakers are about to make major investments in producing hybrid gas-electric automobiles . in America.
First comes Toyota (NYSE:TM), the company that already has a hammerlock on the hybrid market thanks to the runaway success of its Prius sedan, which commands a 64% market share in the United States. How popular is the Prius? In April, Toyota sold more of its hybrid vehicle than Ford's (NYSE:F) Mercury division sold of all Mercury-branded vehicles -- combined.
Toyota has announced that beginning late next year, its Georgetown, Ky., plant will start production on a hybrid version of its popular Camry sedan. Toyota intends to invest as much as $10 million to upgrade the plant for production of hybrids, after which it expects to be able to roll out nearly 50,000 hybrid Camrys per year.
Not to be outdone, Toyota rival Nissan (NASDAQ:NSANY) announced last week that it, too, will produce a hybrid sedan in the South. Nissan, which licenses its hybrid technology from Toyota, will manufacture a hybrid version of its award-winning Altima sedan at one of the company's U.S. plants, either in Tennessee or Mississippi. Once again, late 2006 is the expected timeframe for beginning production.
As with Toyota, Nissan will be importing many of the crucial hybrid components, most notably the batteries, from Japan. As we've already discussed, two of the prime suppliers of these batteries are Japan's Sanyo (NASDAQ:SANYY) and MatsushitaElectric (NYSE:MC).
Left out in the cold is Honda (NYSE:HMC). Although it's enjoying success in the United States with its Civic and new Accord hybrids, it continues to manufacture both models abroad, for import to the States. With Nissan and Toyota already on the ground in the United States and able to produce their cars on the "right" side of U.S. tariffs and free of many transoceanic shipping costs, Honda could find its profits pressured unless it, too, moves its production across the Pacific.
With all their growth -- both prospective and ongoing -- Japan's automakers are priced for success relative to their U.S. rivals. Read all about it in "Pick a Car Company. Any Car Company."
Fool contributor Rich Smith has no position in any of the companies mentioned in this article.
