Toyota warns of price rises as profits slump again

Toyota says it plans to increase the price of cars in Europe as it battles with high costs caused by a shortage of parts and, therefore, decreased profits.

As part of its Q2 financial results released today, the Japanese firm revealed that profits declined for a fourth successive quarter to ¥562.7 billion (£3.3 billion) – down ¥187.2bn (£1.1bn) year on year. It has also cut its production target by 500,000 cars to 9.2 million.

Now, Toyota bosses have warned that this waning profit will lead to price increases (also in the US market) to offset surging costs. 

"We are really racking our brains trying to come up with the appropriate pricing level," said chief communications officer Jun Nagata, reports Automotive News Europe.

"We have begun to reflect those higher prices into the vehicle as much as possible."

Toyota has not announced by how much it plans to increase the price of its models, but Nagata hinted they would stay within a range customers expect.

"We would like to keep that general image of the vehicle and the price relationship," he said.

The firm's UK line-up currently ranges from the £15,655 Toyota Aygo X to the £49,495 Toyota Supra. It also includes the £43,780 Toyota bZ4X, the marque's first EV, which was hit by recall troubles when it was launched earlier this year.

Downplaying the price rise, Masahiro Yamamoto, chief officer of Toyota Motor Corporation, added: "Every year, we have been changing prices once or twice a year, and by increasing the frequency of pricing changes, we would like to reflect those higher costs.”

The news comes after a 2022/23 profits warning from Toyota bosses back in May, when the firm reported record profits in 2021/22 despite being knocked by the Covid pandemic.

Executives warned Toyota's earnings could fall by as much as a fifth because of an “unprecedented surge” in material costs that had hit vehicle production, driven mainly by a lack of available parts.

Speaking today, Kazunari Kumakura, Toyota's purchasing group chief, confirmed that “we're out of the worst phase, but… it's not necessarily a situation where we're fully supplied,” reports Reuters. 

He added: “I don't know when the chip shortage will be resolved."