Toyota Won’t Raise Prices to Bail Out U.S. Competitors
Toyota Motor Corp. said Tuesday it will not raise its car prices to help U.S. rivals, breaking with its chairman’s comments a day earlier that voluntary price increases and other steps were in order to help restore health to the U.S. auto industry. “Our basic stance is that prices are something for the market to determine,” a spokesman at Japan’s top auto manufacturer said. “We are not thinking about changing (vehicle) prices in order to help the U.S. auto industry.”
Japanese brands collectively grabbed a record 30 percent share of the U.S. auto market last year, and some executives have become more sensitive about how their companies’ success would play out at the political level.
At the annual motor show in Detroit earlier this year, Toyota President Fujio Cho and Honda Motor Co. Chief Executive Takeo Fukui said Japanese brands’ expansion in the United States should not go unchecked, with Fukui volunteering that the combined share should be kept under 40 percent. “I’m worried not only about GM but about the entire U.S. auto industry,” Toyota Chairman Hiroshi Okuda told a news conference Monday as the head of Japan’s biggest business lobby, the Japan Business Federation. “Automobiles are the symbol of American industry, and if things go wrong there may be some kind of impact. “As an automaker, we have to think about what countermeasures we can take,” Okuda said, adding that technical alliances and voluntary price rises are possibilities.
The very idea that companies would raise prices so as to help out their less efficient competitors is mind boggling. One of the few major disagreements I had with President Ronald Reagan was his policy of putting restrictions on the Japanese auto manufacturers (and other industries) to protect bloated domestic firms. While I’ve got some sympathy for protectionism to combat illegal state subsidies abroad, it’s outrageous to do it in cases where it’s a case of bloated companies being challenged by more efficient and innovative competitors.
General Motors has been a behemoth in the world auto market for decades. If they haven’t figured out how to make cars that Americans want by now, the hell with them. Toyota and Honda can buy their plants and start manufacturing desirable cars almost immediately.
Initially, the Japanese firms had an edge because the fuel price shocks of the 1970s spurred Americans to buy tiny economy cars that Detroit had little experience making. But Detroit compounded their disadvantage by refusing for more than a decade to seriously make a shift in that direction. When fuel prices quit being a major concern and Americans shifted toward buying cars with powerful engines, pickup trucks, and sport-utility vehicles, American firms once again had a huge advantage. They allowed the Japanese firms to catch up to them and even surpass them in short order. Why Toyota should bail them out is unclear.