After many recent reports it was eyeing domestic market price hikes, Toyota finally confirmed on Wednesday it was considering rises spurred by sharply rising raw material costs, after a business newspaper said it was preparing to announce new prices in Japan next month.
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Toyota had begun telling dealers it planned price increases, the Nikkei said today.
The newspaper noted this would be the first time since 1974 (around the time of a major oil price crisis) that Toyota had raised home market prices of current models rather than hiking them when redesigned models were launched.
Increases of 1%-3% are expected for vehicles most affected by rising steel and raw metal costs like the Prius hybrid and Dyna truck, the unsourced Nikkei report said.
Increasing demand for the key steel-making ingredient, iron ore, from fast-growing countries like China and India has boosted its price substantially.
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By GlobalData“We are aware of the current situation of higher raw materials prices,” Toyota spokesman Hideaki Homma said.
He added that Toyota executives were considering vehicle price rises to compensate for soaring material costs but said no decision had been made. Local reports suggested Nissan would wait for Toyota to hike its prices before following suit.
Analysts noted the Prius dominated the hybrid market so was unlikely to be affected significantly by a price rise but dealers might have to reduce profits on commercial vehicles to avoid losing sales.
But an industry observer warned price hike financial benefits could be limited and would put off buyers. “I am not sure if this is the risk worth taking,” the anonymous Japanese brokerage house analyst said.
