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Toyota nears price pact with suppliers
Last Updated(Beijing Time):2008-05-19 10:23

Toyota Motor Corp, the world's second-largest auto maker, is near a price increase accord with steel suppliers to offset the rising cost of raw materials.

"We are close to reaching a final agreement on a price increase," President Katsuaki Watanabe told reporters yesterday at a factory in central Japan's Toyota City, where the company is based. He didn't specify suppliers or terms.

Rising metal prices will hinder the company's cost-cutting efforts this fiscal year. All eight Japanese car makers forecast operating profit to drop as a stronger yen and higher raw materials costs erode earnings, Bloomberg News said.

Toyota is negotiating with Nippon Steel Corp and other steel makers on the magnitude of price increases, Watanabe said on Thursday.

The price increase with Nippon Steel, the world's second-biggest maker of the metal, will be in the "upper 20,000 yen (US$190) range" per ton, Nikkei English news reported on Saturday, without saying where it obtained the information. The increase, the second in two years, will push the costs of automobile steel beyond the 100,000-yen mark for the first time, Nikkei said.

Such an agreement will lead to similar price increases among steel makers, auto makers and auto-parts producers, which in turn are likely to drive up material costs in the Japanese auto industry by as much as 1 trillion yen in the year ending March 31, Nikkei said.

Price boost

To help offset rising costs, Toyota plans to boost the price of some United States models this month by 0.7 percent on average. Nissan in April raised the price of its Versa compact car and Pathfinder sport-utility vehicle. Honda on May 12 said it is considering raising prices in North America, Japan and other markets.

When auto makers revamp models, they often raise prices to reflect the cost of new safety and environmental features and higher raw materials expenses.

Toyota is passing some of the higher materials costs onto customers by boosting the price of its Alphard minivans. The starting price of the Alphard 240X rose by about 80,000 yen from the previous version.

The firm also improved the minivan's fuel economy and added more safety features.

Source:Shanghai Daily 
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