NAGOYA – Toyota Motor Corp. is considering raising vehicle prices in emerging markets to offset the impact of weakening local currencies, according to a source.
Depreciating currencies in Brazil and other growth markets on the back of the tapering of U.S. monetary stimulus are eating into the profitability of 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 source said Monday.
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 last fiscal year.
But as Toyota’s major markets are spreading to include the 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 this fiscal year. That will work to limit growth in profits to 0.3 percent after posting record profits last year.