In General Motors Death Watch 182, I reported on GM's decision to squeeze a little more blood from the stone known as U.S. sales, by raising their product prices by 3.5 percent across the board. I pointed-out that Toyota could eat some more of GM's market share simply by NOT raising their prices or, God help Motown, lowering them. I predicted that ToMoCo would raise their prices, to maintain profitability and avoid any possibility of an anti-transplant backlash. And so they have. The AP [via The International Herald Tribune] reports that Toyota will up prices by a little over one percent– except for the hot-selling Prius (up 2.2 percent or $500). The timing is curious; the news arrived on the same day that GM lowered and extended its employee pricing. In any case, it's clear that Toyota is treading carefully, refraining from delivering the killer blow that's well within their power. They're leaving that for The Big 2.8 themselves.
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Yup, Toyota again proves that they are businessmen and want to make profits. And cover their ass at the same time. They surely don’t want to be blamed for GM’s implosion. Wish we had real businessmen running detroit. Of course if we did, they wouldn’t be in the spot they are in today.
Anyone know if GM will ever announce their second quarter financial results. Betcha they are trying to delay that as long as possible. Maybe if they wait long enough, people will just ‘forget’ that the quarter even existed. They do that about their customers problems all the time. So why not try it with the financial/automotive community. Kinda like ‘automotive dementia’. Why cause GM management more problems? They have enough on their plate already.
I think if Toyota would put GM out of it’s misery, we’d all be better off, Toyota included. Democrats drive Toyotas, and Republicans loathe the Big 2.8 and their UAW-slacking, government-handout-seeking ways, so who’s left to be offended?
This just proves that the Japanese are too polite.
I’m inclined to think that Toyota’s sole motivation in raising prices was to preserve their margins in light of higher commodity/raw material costs (i.e. steel, plastic, tires, etc.) I don’t believe it had anything to do with a desire to prevent an anti-transplant backlash.
Toyota is obviously coming from a position of relative strength in the marketplace (particularly in the car side, not so much in the truck side). The weird thing about GM’s price increase announced a few weeks ago is that their transaction prices are probably dropping in spite of the price jack, just because incentives have been cranked up. Oh well.
Honda has also signaled that they plan to raise prices at some point this year in order to deal with ever rising raw materials costs. I don’t think they have announced details yet though.
Toyota is actually better off competing with the UAW saddled domestic 2.8.
If Toyhonissan wanted to go for the jugular they could drop their prices and gain yet more market share. Chrysler, GM and Ford would drop dead in that order. But then they would create a wide open market with potential room for more competent competition.
RedStapler Says:
If Toyhonissan wanted to go for the jugular they could drop their prices and gain yet more market share. Chrysler, GM and Ford would drop dead in that order. But then they would create a wide open market with potential room for more competent competition.
Yes, they would. It might become challenging for them, and that would be a good thing for everybody.
The local Toyota dealer has ‘market adjustments’ on the Prius ($4k), and something less on the Yaris, Corolla and Camry. Plus and $695 or maybe $895 add on for a Xzilon treatment, plus more for pinstripes and mud protectors. Ditto for the local Honda dealer concerning Xzilon, pinstripes and mud protectors. Even so, the Prius are sold before they hit, there are no Yaris or Corolla, no auto Civics and one Fit.
So Toyota is just leaving money on the table if they don’t raise prices.
Maybe they’re trying to leave the domestics weak but not dead, so there are no surprise resurrections.
I think Chrysler, GM, and Ford are more harmless in their current state than if they were allowed declare bankruptcy and cut the dead weight (read: UAW, excess dealerships, excess capacity, excess brands) or if they received cash infusions from the federal government.
So if gasoline went to $2.45 this week and stayed there for a decade before doing another rocket powered climb to $4 a gallon – would Detroit be any more prepared than they were this time?
Would their game be any different?
Toyota is more interested in earnings than market share (although they want both.) For decades, they have made a point of not competing on price — Toyota markets themselves as selling quality at a price premium, not as a discounter. Toyota will gain the market share organically, there’s no need to lower prices in order to take it.
I would expect them to raise prices across the board every year. If a product is slow, they move a batch with incentives and then reduce production enough so that the market is served without a massive price cut. Unlike the 2.8, they don’t keep the factory open churning out product long after it has become obvious that nobody wants it, just so that it can end up on a rental lot.
The Detroit philosophy is, If they build it, they will come…oops, they didn’t show up, so let’s rent it, instead. Not a great way to run a business if you want to make money.