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Toyota Raising Prices to Help Ailing U.S. Auto Industry

June 10, 2005
Toyota Motor Corp. plans to raise the prices on most of its models in the United States to help its struggling rivals in Detroit and to prevent trade friction from erupting, according to published reports in Japan.

The price hikes of 2 percent to 3 percent will likely start in October.

The automaker will increase delivery costs for sales companies and reduce incentives, which will force the retailers to make up the difference with higher prices.

In 2004, Toyota posted record profits and sold 2.29 million vehicles in North America, an increase of 10.6 percent from the previous year.

But the fortunes of the U.S. automakers went the other way. General Motors Corp. recently announced it would cut 25,000 jobs by 2008 and has expressed its intention to substantially raise its auto prices.

Concerned that Toyota's success in the United States could be viewed as coming at the expense of U.S. automakers, Toyota Chairman Hiroshi Okuda repeatedly said Toyota would need to adjust prices. He also wants to stave off any potential trade friction that could lead to the "Japan bashing" seen in the United States in the 1980s and 1990s, the sources said.

In the U.S. auto industry, vehicle prices usually change when new models are offered. Toyota generally raises prices only as a result of foreign exchange fluctuations or when equipment is added to its cars.

Under the changes in October, the Camry, Toyota's best-selling midsized sedan in the United States, will cost several hundred dollars more than its current price of around $20,000.

Toyota officials said they have no immediate plans to significantly revise auto prices in Japan.

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