Toyota, Nissan Motor and Honda have said they will be unable to pass on higher steel costs to customers as competition limits their ability to raise prices.

According to Bloomberg News, Brazil's Cia. Vale do Rio Doce, the world's largest iron ore exporter, which usually sets the price benchmark, earlier this week agreed with Japanese and European steelmakers to a 19% price increase for the steelmaking ingredient.

Higher prices for steel, rubber and other materials boosted Japanese automakers' costs by at least 100 billion yen ($903 million) for each company in the year ended in March, partly offsetting their cost reductions, Toyota, Honda and Nissan reportedly said.

"The price of steel rose quite a lot in the past year and we aren't in the business environment to pass on the increase in the retail price of cars,'' Takeo Fukui, president of Honda, told Bloomberg News in an interview. "We will start discussions with steelmakers. It won't be so easy for them to boost prices.''

The report said Nippon Steel, Japan's biggest steelmaker, said on 18 April it charged an average of 74,300 yen a ton for steel products in the year ended 31 March, or 21% more than a year earlier.

The 19% increase in the cost of iron ore means prices are now more than double the average price for the past 25 years, Credit Suisse Group reportedly said.

"The increase in the cost of steel is a big problem for the industry,'' Nissan Chief Operating Officer Toshiyuki Shiga told Bloomberg News.

The price of iron ore jumped 71.5% last year, and coking coal more than doubled. Both are steelmaking ingredients. Prices of iron ore will rise by another 19% this year, while coking coal prices has fallen by 8%.

The news agency said Toyota's cost cuts fell to 130 billion yen in the year ended March from the previous year's 160 billion yen because of higher prices of rubber, steel and other materials.

"We didn't expect another year of price increases,'' Fujio Cho, vice chairman of Toyota told Bloomberg. "We've had price increases for the last three years.''

"If we increase retail price, cars won't sell,'' Mazda chairman Kazuhide Watanabe told the news agency. "We are working on improving materials such as thinning steel plates or substituting plastics for steel."