Toyota Highlander Hybrid Essay Example | Topics and Well Written Essays - 2250 words

Toyota Highlander Hybrid - Essay Example Prices of inputs rise for the firms hence increasing their costs of production. This reflects into the prices which they charge from the consumers. The consumers are finally faced with high prices which puts a negative impact on their disposable income. Besides this, fuel prices also affect the household’s buying patterns as the consumers’ transportation expenses are directly linked with gasoline prices. Dijk and Yarime therefore rightly say in their journal that the consumers are constantly looking for cheaper fuel alternatives. Hybrid technology was introduced globally in late 90s. The history however dates back to the 20th century. Honda launched its Insight in the year 2000 after Toyota’s Prius hit the market in Japan in the year 1997. Nersesian rightly puts that there is a growing concern of rising costs amongst the consumers because of which, the demand of fuel efficient cars is rising. Besides this, governments are increasingly encouraging consumption of greener alternatives of oil as a fuel. The importance of hybrid cars is increasing day by day as not only it is cheap, but also fuel efficient and is environment friendly. It meets the concern of both the consumers, businesses and the environmentalists (N ersesian, 2007). 2 Supply And Demand 2.1 Role and Impact of Independent Variable The independent variable here in the Demand factor is the price of fuel. As Hybrid cars and fuel price are close substitutes, price of one changes the demand of the other. The price being the Independent Variable, Toyota Hybrid’s demand is solely dependent on the prices of fuel. As Diamond suggests that as oil becomes expensive, the consumers look for cheaper options to the extent, that they may dispose their low mileage vehicles and trade-in for more fuel efficient vehicles. The oil prices therefore, Khusid, stand as major independent variable which influences the demand of Toyota Highlander Hybrid. Besides its impact on demand, the producers also experience a rise in their costs of production because of which, they have to reduce their supply, which in turn increases the overall market price. However, as consumers switch to Hybrid cars, the demand curve shifts to the right, hence balancing off the price increase (Diamond, 2006; Khusid 2010). The price of the car itself however, remains the independent variable for the suppliers. As price is the motivating factor for both the household and the businesses, it remains the independent variable and hence, the major influence on both the demand and supply. Besides this, there are also hybrid conversion kits available in the market which makes it a lot easier for consumers to switch to cheaper alternatives (Nersesian, 2007). The price of hybrid conversion kits available in the market also influence how consumers respond towards Hybrid cars with fluctuations in prices of these conversion kits. If the prices fall, the demand of Toyota Highlander Hybrid is most likely to get inversely affected as the consumers will switch to a cheaper alternative. Therefore, another of the independent variable is the price of hybrid conversion kits. However, the price of conversion kits does not have a direct effect on the supply of hybrid cars as none of the factor s which affect the supply gets influenced. This independent variable only has an impact on the consumer demand and therefore, the supply remains uninfluenced. The tax-rate on hybrid is also a pressure on both the supply and demand of Hybrid vehicles. The tax-rate on fuel efficient and eco-friendly cars is usually low as in incentive from the government for both the consumers and the suppliers to switch to the