Toyota Raises Hybrid Prices in Japan To Offset Higher Steel, Material Costs

Associated PressAugust 25, 2008 2:55 a.m.

TOKYO -- Toyota Motor Corp. is raising the prices in Japan for the Prius and Harrier hybrids in response to the soaring cost of steel and other raw materials -- the first increase in the country without a model makeover in three decades.
Speculation had been rife that Japan's top auto maker would raise some domestic prices soon, and Toyota has acknowledged that as risky because the domestic market is already sluggish.
The new suggested retail prices, announced Monday, show an average increase of 3% for the two gas-electric hybrid models, and an average 2% of several commercial vehicles.
Starting next month, the Prius basic S model will go up by ¥73,500 ($671) to ¥2.38 million ($21,625). The Harrier Hybrid Premium S Package will go up by ¥136,500 to about ¥4.76 million, Toyota said in a release.
Other Japanese auto makers may follow. With steel prices surging, Nissan Motor Co. Chief Executive Carlos Ghosn has hinted he is waiting for its bigger rival to take the lead to make it easier for others to raise their prices, too.
Toyota said it has struggled to keep prices down with cost cuts, but material costs are expected to stay high for some time. "Recent further price increases in raw materials have been larger than [Toyota's] cost reduction efforts are able to offset," it said.
Like other auto makers, Toyota has raised its U.S. prices without major model changes previously. The last time Toyota raised prices on Japan models was in 1974, by 10%, in the wake of the first oil shock. It also increased prices in 1973, by 7%, as well as on its commercial vehicles such as trucks and vans in 1992. Otherwise, Toyota hasn't raised prices in Japan except for remodeling in which improved features are added.
Toyota has averted some of the serious troubles of its U.S. rivals General Motors Corp., Ford Motor Co. and Chrysler LLC. But the Japanese car maker is struggling to fight skyrocketing energy prices, the crunch of material costs and fears of stagnation on global markets.
Toyota, which also makes Lexus luxury models and the Camry sedan, reported a 28% drop in its April-June quarterly net income. It is forecasting its first full-year profit decline in seven years as it faces more problems from the weakening U.S. market.
Copyright © 2008 Associated Press