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Toyota hikes prices for popular cars

Japan's largest carmaker throws sucker punch at Detroit's deep discount campaigns -- report.

July 26, 2005; Posted: 12:17 p.m. EDT (1617 GMT)


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NEW YORK (CNN/Money) - Their Detroit rivals may be slashing sticker prices left and right, but Japanese automakers won't be pulled into a price-cutting war, a news report published Tuesday said.

The New York Times reported that Toyota, Japan's largest carmaker, is doing the exact opposite of its U.S. counterparts by raising prices on some of its models.

The move comes as competitors like General Motors (Research), Ford (Research) and DaimlerChrysler's (Research) Chrysler Group are offering "employee discounts" in an effort to attract customers to showrooms.

Toyota (Research) increased prices because of higher costs of steel and other raw materials, the newspaper reported. Those price hikes -- which range from $250 to $300 -- will hit U.S. versions of the company's popular Camry sedan and some of its luxury Lexus vehicles, the report said.

Japanese carmakers have generally followed a strategy of avoiding cash and sales incentives in favor of building a loyal customer base and reinvesting their profits into higher quality and more expensive technologies such as low-polluting engines, the Times said.

The newspaper also said Japanese automakers fear that price cuts will undermine the resale value of their vehicles.

Nissan spokesman Simon Sproule told the paper that Nissan is focusing on offering competitive products rather than "being the cheapest dealer in town."

The Times said the strategy of Japanese automakers could face its toughest test as American automakers engage in a bitter price war by offering regular buyers the hefty discounts once reserved for employees only.

Those discount campaigns have helped U.S. carmakers regain market share in the U.S., according to the report. In June, the Big Three automakers' share of the U.S. market rose to 61.6 percent from 58.4 percent in the year-ago period, the report said, citing information from Autodata.

But, the newspaper said, Toyota and other major Japanese carmakers are holding their ground. "We have no plans to offer new incentives or price cuts," Koichi Kondo, senior managing director in charge of Honda Motor's (Research) American operations, said in the report.

While truck sales are feeling the impact of those deep discounts, they aren't affecting sales of Japanese sedans, Honda's Kondo told the newspaper.

According to the report, Toyota, Nissan and Honda sold more cars in the U.S. in June than they did a year ago, although their gains were not as large as GM's.

Toyota spokesman Paul Nolasco told the Times that Toyota believes that "customers will keep coming back if you offer them quality."

The company's price increases, which go into effect Aug. 1, affect seven models sold in the U.S.


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