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Tuesday, April 26, 2005

Charity From Toyota?

This morning, on the radio, I heard something that made me drop my toothbrush. Toyota was supposedly going to raise its car prices, to help Ford and GM. What?!?

Reading about it later, I see that there is wisdom in what Hiroshi Okuda said. It is an example of Japanese long term, careful thinking. From the Seattle Post:
"I'm concerned about the current situation surrounding GM. Although a trade conflict, like ones (that) happened in the past, may be avoided, there may be some impact (on Japan's car industry) because the car industry is symbolic in the U.S. economy," Okuda was quoted as saying by the Japanese daily Asahi Shimbun.

There are several reasons why Toyota would want to moderate its domination of the American auto market. GM and Ford sre both huge companies, and the failure of one would be devastating to the US economy. Toyota would lose business, because many fewer people would be able to buy new cars, as the economic shock wave rippled outward.

As mentioned in the quote, Toyota is wary of a "buy American" backlash, that would also hurt their sales. Toyota wants to avoid protective US government intervention, in an effort to save Detroit.

The failure of GM and Ford would also be devastating to the supply base, which either supplies Toyota or provides competition to Toyotas suppliers, keeping prices in check.

Toyota wants to win, but it has a timetable for its goals. Toyota is patient.


NextGenAuto said...

The supply base is already being hurt.

Plus, Toyota Corporate has already officially said they won't raise prices to help GM.

Anonymous said...

If this story is true (and I highly doubt it), it's a significant loss to American consumers who will be forced to spend additional grocery, education, and savings money on cars instead.

It's always a mistake for private companies to do the government's work, just as it's always a mistake for the governmetn to do the work of a private company. If GM's in trouble, let GM start building cars people actually like and pay sticker price for. WTF is so difficult there?

The Auto Prophet said...

Indeed, there has been an official "clarification" from Toyota on these comments, stating that they will not raise prices. Still, the thinking is very interesting behind the original comments.

Ari said...

Actually, it seems that Toyota was rationalizing its price hike. They have to raise prices to make the same profit because of the depreciation of the dollar. A weaker dollar makes imports more expensive and domestic products much cheapers by comparison. Toyota, to maintain the same profit margin, will be forced to raise prices.