Toyota Motor is in the final stages of talks with Nippon Steel on steel sheet prices and may accept a 25 % increase for the April-September period, the Nikkei business daily reported.
A 25% price hike would add an estimated JPY20,000 to the steel cost per vehicle, the Nikkei said, according to Reuters.
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“It’s tough for both steelmakers and automakers, but when automakers’ earnings are recovering this may have been unavoidable,” Advanced Research Japan senior analyst Koji Endo told the news agency.
“What Toyota will do from here is rationalise production and absorb the costs, and maybe raise retail prices, though it’s not easy to do that.”
He added that Toyota may try to hike prices in markets such as China, the Middle East and Southeast Asia where demand is strong, as well as in the United States, where demand has started to pick up.
The steep rise from the previous financial year would put the price of cold-rolled steel sheet around JPY100,000 yen a tonne, with zinc-coated steel sheet priced even higher, the paper said.
The Nikkei said that if Toyota accepts the deal for April-September, it would also mark the end of an annual price-setting regime that has lasted for more than 20 years.
Nippon Steel and other major Japanese steelmakers have been asking their customers to shift to a quarterly price-setting cycle, but automakers have been resisting the call.
If Toyota does accept a half-year pricing cycle, other automakers as well as other industries may follow suit, the paper said.
