| HOME
|
Toyota to hike Japanese car prices for first time in 30 years as costs rise
August 26, 2008
By Daniel Rook
Tokyo - Toyota Motor would raise the prices of some passenger cars in Japan for the first time in three decades in response to skyrocketing steel costs, the country's leading car maker said yesterday.
Analysts said the move was expected to cushion Toyota's profit from the impact of higher material costs, but it risked depressing already weak demand as the Japanese economy teetered on the cusp of recession.
Toyota said it would increase the retail price of its Prius hybrid by 3 percent from September 1. Commercial vehicle prices would rise by 2 percent on average.
The group said that so far it had been able to compensate for material prices by cutting costs.
"However, recent further price increases in raw materials have been larger than Toyota's cost reduction efforts are able to offset," it said in a statement.
Japan's car market is depressed by weak consumer spending, a shrinking population and signs that young Japanese are losing interest in cars.
"Toyota has no other choice but to raise prices to increase its profitability," said Hirofumi Yokoi of consultancy CSM Asia.
"Toyota will now be forced to gradually raise the prices of its other models. The price hikes are expected to have a big impact on domestic sales at a time when demand in Japan is already weak."
It is the first time since 1974 that the car giant has raised the domestic prices of existing passenger vehicles, rather than waiting for new or upgraded models.
The price of iron ore has soared in recent years due to rising demand, forcing steel makers to pass on the increased costs.
Japanese giants Nippon Steel and JFE Steel last month said they had agreed to almost double the prices they paid to Rio Tinto and BHP Billiton for iron ore.
The soaring cost of materials was one of the main culprits for a 28 percent tumble in Toyota's net profit in the quarter to June.
Nissan, Japan's third-largest car maker, has indicated that it was waiting for market leader Toyota to raise vehicle prices before it followed suit.
"All car manufacturers will increase prices. It's a question of time," Nissan chief executive Carlos Ghosn said last month.
"How can you not increase prices if the price of raw materials goes up 100 percent?"
Toyota recently cut its global sales target for this year and has indicated that it might lower next year's target, which would push back its goal of becoming the first company to sell more than 10 million vehicles in one year.
The US economic slump, weak domestic demand and soaring commodity costs have put the brakes on its expansion.
|
|
|
Social bookmarking allows users to save and categorise a personal collection of bookmarks and share them with others. This is different to using your own browser bookmarks which are available using the menus within your web browser.
Use the links below to share this article on the social bookmarking site of your choice.
Read more about social bookmarking at Wikipedia - Social Bookmarking
|
|
|
News
Markets
Technology News
Company News
International
|
