Buy Your Toyota Now. These Prices Won't Last
Unless you plan a trip to Toyko, you probably aren’t concerned about the exchange rate of the yen. Is a Japanese car on the list of your possible purchases? Then you should be concerned. Those prices will go up.
Toyota will raise its prices in the U.S. and Europe to cope with the strong yen, says The Nikkei [sub]. But raising prices is like sex between porcupines: You need to do it very carefully. Hyundai is just waiting for such a move.
According to The Nikkei, Toyota “will have to get the timing and size of the price hikes right to avoid a plunge in demand for its cars.” Easier said than done. Toyota’s sales are already a bit iffy, the SUA inquisition has left its marks that take years to heal.
But Toyota ” cannot just sit idly by while the yen keeps rising. We will raise the sticker prices of our cars,” Toyota Senior Managing Director Takahiko Ijichi told The Nikkei. They will also focus more on higher-margin models.
Higher prices in the U.S. and Europe? That will cost them.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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So when over 80% of the parts and 100% of the assembly labor of a Toyota Camry is USA local content and priced in US dollars; why would Toyota be forced to raise the price in US dollars? This does not even mean that most of the other 20% is price in yen either. Only cars built and exported out of Japan will cost them more to manufacture. In the US market this is a large portion of the Lexus lineup. Toyota says they will make less cars in Japan if the Yen continues to rise in value. They understand this simple concept?
The base Highlander has already jumped to near $28K from $23K only a few years ago. Am looking for a Highlander-sized vehicle, may go with an Equinox or Traverse (Equinox is between RAV4 and Highlander, Traverse is larger than Highlander) instead.
Toyota is going to have a very hard time making price increases stick unless they are willing to give up a lot of market share. US and European based companies are hungry for market share and will defend their home turf. Hyundai is gaining ground and, at least in the US, has committed major capital to build in market for the market.
Meanwhile, China's factories are chomping at the bit.
Toyota doesn't have much market leverage these days. The 900 lb. gorilla is starting to look like a dinosaur.
This is simply correcting for the abnormally low prices for new vehciles in the United States. No one should quote me on this, but it appears to me that prices in the U.S. are among the lowest in the Western world. New car prices in Europe are higher, and depending on the car, prices in Canada are about $5000 - $10,000 (roughly speaking) more that the same model in the U.S. - even though the Canadian dollar is at par with the American one ( $1 US = $1 CAN). Car companies can sell us (Canada) cars with more options and different models and engines because they can demand more. Given the America is becoming more irrelevant, fast being overtaken by the Far East, and the poor state of the economy (why is the American dollar devalued?), I see that either prices will become more at par with the rest of the world, or Americans will see more of the kind of cheaply engineered, America-specials such as the new Jetta and replacement for the Passat come their way.