I stumbled across this story while nosing around the BBC's North American business section.

The gist of it is that Toyota Corporation has public pondered that perhaps it will raise North American Toyota prices (& presumably Lexus prices too) "as a gesture to struggling American rivals".

Here's a link to the story.

My questions for debate are:

Do you think Toyota will go ahead with these mooted price increases?
Why? Is there anything in it for them other than good PR?
(edited to add) Will it make any difference to Ford, GM and the others, if they do?
Can you imagine a US business making the same kind of gesture, & if so under what circumstances?

The CEO of each company has the interests of its own company in mind, first and foremost (and that's the way it should be). Therefore, what Toyota is doing must benefit Toyota in a long run, in one way or the other. Maybe they try to avoid some hastily baked legislation which would impose penalties on them for undermining American manufacturers (never mind that Toyota, just like most other Japanese carmakers, builds their vehicles in United States). Maybe they figure that they'll increase their profit margins and they'll have an excellent PR move - at the expense of almost nothing (after all, a person who is willing to pay $50,000 for a new Lexus will probably will not think twice and pay $51,000).
The bottom line is, I don't believe that Toyota is doing it purely for charitable reasons. Can I imagine an American business doing that? Sure... if it benefits them in a long run.

Well, to be honest, US car manufacturers are on the way out, Asian ones on the way in. Toyota is in a position of strength, but probably wants to avoid protectionist moves by the US that would damage its business. In the long term, Toyota will not be competing with US manufacturers but Chinese manufacturers, so this is an easy sacrifice to make. They bolster a steadily weakening competition, thereby avoiding US protectionism, whilst offering no advantage to potential Asian competitors.

That is very true. It has been a decade since the Big two US car manufacturers (GM and Ford) turned a dime in profit, and the third, Chrysler only managed to turn its losses around (it made its first tiny profit in a decade last year) was after it merged with Daimler, a German company.

Us car companies have been saved by government intervention so many times: in the mid 80s by Regan's 'export restraints' agreement with Japanese producers, protecting US companies by limiting availability of the competition; since then because the US government imposed a 25% import tariff on all foreign made trucks and light trucks, providing the US companies with a protected niche market. Now however, in the last 24 months, foreign trucks and light trucks produced in North American plants (thus avoiding the tariff) have begun to outsell US produced trucks and light trucks, eating away at the last niche of profitability the US companies had.

Sales of cars produced by US companies in North America is currently at 56% the lowest it has ever been, and on a steady and seemingly irreversable downturn, lower and lower every year. Even the President of Ford recently stated that oon Foreign made cars would outsell US made cars overall.


The US was always supposed to be the capiatlist country, supply and demand and all that.

If they cannot compete, which they obviously and consistently cannot, let them die. Toyota knows full well this move, if they take it, will increase popularity, and in no way slow the death of the US car manufacturing industry.

Yes, they'll probably raise prices. Especially since I doubt a 2-3% price increase will affect their sales very much.

I think good PR would be a secondary effect. The main result from the price increase will be higher profits.

Probably not. I can't see anyone converting from a Japanese car to an American over a few hundred dollars. Certainly it's not enough to make me buy from GM or Ford.


If a business has a product that is in high demand and there is low demand for the competitor's, then it is in a good position to raise prices without any decrease in sales. So, I can imagine any business (US or otherwise) making this same kind of "gesture" if it is in a position of strength.

Do you think Toyota will go ahead with these mooted price increases? Why? Is there anything in it for them other than good PR?
If they have suggested they are going to publicly, then I think they will probably do it. However, I don't buy their reason for doing so. They aren't doing this because they want to make some sort of noble gesture to American car companies, they are doing this because the demand for their vehicles supports a price increase.

The Prius is extremely hot right now and in a lot of markets there is a wait just to get one. The Prius also is already more expensive than a comparable car with a traditional combustion engine. Other Toyota vehicles are critically acclaimed and have a great brand established for quality and luxury. Lexus has also increasingly been making advances in the luxury market against big players like BMW, Mercedes and Audi.

Will it make any difference to Ford, GM and the others, if they do?

No it won't. People will still continue to buy japanese and german cars because American car companies just don't get it. Many of the lines have very poor or non-existent branding and identity. American car companies are moving in exactly the opposite direction of demand - they are making bigger SUVs and trucks when people are demanding fuel efficiency, hybrids, alternative energy and smaller cars. Their designs are bland and completely uninspiring. You can get a bargain basement Honda Civic or you could buy an average car from GM or Ford. The Civic certainly looks and feels nicer for the money and has a better reputation of not breaking down - not a hard choice even for the budget conscious.

Until American companies realize what consumers want they are going to continue to fall behind.

Do you think Toyota will go ahead with these mooted price increases?

How am I to know?

Why? Is there anything in it for them other than good PR?

Higher profits per car, and perhaps (if enough people are willing to pay more) more profits across the board.

(edited to add) Will it make any difference to Ford, GM and the others, if they do?

It will help them, but by how much I dont know.

Can you imagine a US business making the same kind of gesture, & if so under what circumstances?

Ive never heard of it being done, so my imagination doesnt have much to work with.

Overall, I think Toyotas using this as an excuse to increase profits at the consumers expense.