Toyota has agreed to allow Ford to use its hybrid fuel system after reaching a licensing agreement.  The US manufacturer is developing its own SUV hybrid model as demand for more economic vehicles is slowly increasing. However, Toyota’s head start in the dual fuel sector could give it a decisive advantage in the future.

Toyota has reached an agreement with Ford covering the use of hybrid technology. Ford is still developing its own hybrid SUV model, due to go on sale later this year, which will be using the same technology as the Toyota Prius hybrid model. Hybrid vehicles switch between internal combustion and electric motive power, reducing overall fuel consumption and decreasing harmful emissions.

Hybrids have become more popular over the past few years. US dealerships sold over 40,000 hybrids in 2003, and this number is expected to reach 100,000 this year and 350,000 by 2008.

With the Prius, Civic and Insight models, Toyota and Honda are the only manufacturers currently offering hybrids in the US. Ford’s first SUV hybrid, the Escape, is eagerly expected this summer while GM and Daimler Chrysler should launch new hybrid trucks and minivans within the next two years.

In the US, Toyota sold 24,000 Prius hybrids last year. As demand increases Toyota aims is to sell 130,000 units of its Prius model worldwide, of which 70,000 will be sold in Japan.

As fuel consumption becomes a greater concern for drivers, manufacturers like Toyota and Honda have managed to combine style, performance and economy by incorporating hybrid technology into popular compact models.

Hybrids still represent a small percentage of the 17 million vehicles sold annually in the US, however demand should increase if variants of the most popular models are introduced. By targeting the SUV segment with a rumoured new Highlander hybrid, Toyota could make entry into this niche market very difficult for domestic manufacturers, while at the same time bringing the hybrid vehicle further into the mainstream of American motoring.

SOURCE: Datamonitor COMMENTWIRE (c) 2004 Datamonitor. All rights reserved. Republication or redistribution, including by framing or similar means, is expressly prohibited without prior written consent. Datamonitor shall not be liable for errors or delays in the content, or for any actions taken in reliance thereon.