Toyota raises Japan prices on 2 hybrids because of soaring material costs

Japan’s biggest car manufacturer Toyota would be raising its prices for their Prius and Harrier hybrids due to soaring cost of steel and other raw materials. This is the first price hike without car makeover in three decades.

This has brought the speculations of raising the domestic prices sooner than expected.

New suggested retail prices increase by 3 percent for two gas-electric hybrid models and an average of 2 percent for several commercial vehicles.

According to Toyota in its press release, starting next month, the Prius basic S model will go up by 73,500 yen ($668) to 2.38 million yen ($22,000).

The Harrier Hybrid Premium S Package will go up by 136,500 yen ($1,240) to about 4.76 million yen ($43,000).

Trendsetting for car manufacturers

This would start a trend for other Japanese automakers. With steel prices surging, Nissan Motor Co. Chief Executive Carlos Ghosn had said he is waiting for its bigger rival to take the lead to make it easier for others to raise their prices, too.

Toyota has struggled to keep prices down with cost cuts, but material costs are expected to stay high for some time.

"Recent further price increases in raw materials have been larger than TMC's cost reduction efforts are able to offset," it said.

Like other automakers, Toyota has raised its U.S. prices without major model changes previously.

Decades before new price hike

In 1974, Toyota raised prices in Japan models by 10percent due to the first oil shock. That was the last time it raised its prices.

Otherwise, Toyota has not raised prices in Japan except for remodeling that happens only once every several years in which improved features are added.