Toyota mulling raising vehicle prices in emerging markets

Posted at 07/08/14 10:48 AM

NAGOYA - Toyota Motor Corp. is considering raising vehicle prices in emerging markets to offset the impact of their weakening local currencies, a person familiar with the matter said Monday.

The depreciating currencies in Brazil and other growth markets on the back of the tapering of the U.S. monetary stimulus are eating into the profitability of the locally built vehicles by raising parts import costs and of exports to those countries with weaker currencies.

But Toyota will decide cautiously on the markets and models to be affected by the new pricing as well as how far it will increase prices, as higher prices could dent sales, the person said.

Toyota sees little impact from the dollar and the euro on its bottom line for the current fiscal year as it expects the currencies' levels to be nearly unchanged from the last fiscal year against the yen.

But as Toyota's major markets are spreading to include those booming markets, and the company, like other Japanese automakers, is also expanding its global supply chain network worldwide, currencies other than the two major ones are having greater impact on the company's profit margin.

Toyota estimates foreign exchange will cut its operating profit by 95 billion yen this fiscal year. That will work to limit growth in the profit to 0.3 percent in the 12-month period after posting record profits the previous year.