Skyrocketing gas prices have had a direct effect on pickup truck and SUV sales, both of which have been declining rapidly. Consumers are demanding smaller, more fuel efficient cars, which resulted in Toyota's recent announcement to add the production of the Prius to its North American lineup, while at the same time consolidating two pickup truck facilities and scaling back production on the gas guzzlers.

"GM, Ford and Toyota all made pretty big bets on the future success of SUVs and light trucks," said Graham Payne, managing director of the Capstone Financial Group, in an exclusive interview with Aftermarket Business magazine. "However, with the decline in the construction market and escalating gas prices, sales of SUVs and light trucks has dried up for all of the auto manufacturers. Now, Toyota is having to re-tool the Mississippi facility that was originally intended to produce its Highlander to make way for the Prius."

According to a press release issued earlier this week by Toyota, the company is introducing the following changes to its North American manufacturing facilities:

- The new Prius will be built at a plant currently under construction in Blue Springs, Miss. Production of the hybrid sedan is scheduled to begin in late 2010.
- The Highlander mid-size SUV, originally scheduled to be built in Mississippi, will now be manufactured in Princeton, Ind., beginning in Fall 2009.
- Production of the Tundra full-size pickup truck, currently built in Indiana and Texas, will be consolidated at the San Antonio plant in Spring 2009.

The Prius will join the Kentucky-built Camry hybrid as the second Toyota hybrid built in North America, enabling Toyota to better respond to increased consumer demand for hybrid vehicles and the recent shortages of the fast-selling, popular vehicle.

"Consumers have begun to realize that low gas prices are a thing of the past," Payne adds. "A vast majority of Prius owners are making their purchasing decisions not based on an attempt to save the environment, but to mitigate the cost of high gas prices. The environmental benefit is a nice by-product, but it is not a major factor for most hybrid purchasers. At the end of the day, it's an economic decision relating to rising fuel costs."

Toyota also announced that it will temporarily suspend Tundra and Sequoia production beginning in August, due to the declining overall market for full size trucks and SUVs. Production of the vehicles is scheduled to resume in early November. Team members at both facilities, as well as the Huntsville, Ala. plant that builds Tundra and Sequoia engines, will continue to be provided work.

"The truck market continues to worsen, so unfortunately we must temporarily suspend production. But this good news about production mix demonstrates our long-term commitment to our North American operations and to our team members, supplier partners, and communities where our plants are located," says Jim Wiseman, vice president/external affairs for Toyota Motor Engineering and Manufacturing North America (TEMA). "By using this downturn as an opportunity to develop team members and improve our operations, we hope to emerge even stronger."

And, with the weakness of the dollar making import items more expensive, Toyota may just benefit from the decision to produce the Prius in the U.S., rather than overseas.

"It's an economic argument, plain and simple," Payne concludes. "With 60 percent of Prius sales occurring here in the U.S., it makes economic sense for them to produce these vehicles in the U.S."

For more information about Toyota, visit the company’s Web site.