Toyota's Most Affordable Cars Are Going To Get More Expensive To Curb Financial Losses

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A more aggressive pricing strategy is going to be needed if the automotive giant aims to stay alive.

Toyota may have to increase the prices of its entire product range for the global market now that it is suffering from the drastically increasing cost of doing business.

This is predominately due to the semiconductor shortage crisis, but declining profits and natural disasters are also contributing to the struggle. The only way the Japanese company believes it can offset these costs is by increasing the sticker prices, but this is going to be a risky strategy.

As reported by Automotive News, this upcoming strategy was hinted at by Chief Communications Officer Jun Nagata during the brand's quarterly earnings. Toyota suffered financial losses in the North American region during Q3, and if things don't change, this will be repeated in the final quarter of the year. Despite these losses, it remains committed to its long history of manufacturing cars in the country.

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Routine price increases are still being applied to the product line, but executives note that these aren't enough to compensate for the costs, and a more aggressive strategy will be needed.

This consists of higher price increases at a more frequent rate. "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," said Masahiro Yamamoto, chief officer of the Toyota Accounting Group.

Naturally, Toyota is concerned about how consumers will react to this strategy, as it can deter many potential sales. Nagata explains that the brand wants to retain its reputation of affordability with its high-selling products like the Toyota Camry and Corolla.

Toyota is aiming to combat this by introducing new variations, such as the Crown, with its competitive sub-$40,000 price tag. Its local EV offerings are also on a steady rise.

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As a means of assurance, Toyota confirms that the worst of the semiconductor shortage has passed, but sadly it has left a permanent uncertainty and production bottleneck so severe the brand had to rescale its planned global production run from 9.7 million units to 9.2 million cars.

Even though a loss in profit is being experienced, Toyota is still burning the midnight oil to get production done. There is still an improvement compared to its 2017 fiscal year, which saw a record-breaking 9.08 million units constructed globally.

Losses are being experienced in the North American market as well. Still, the situation is a bit more hopeful as the region's operating loss of $172.3 million for 2022 reflects a massive improvement from 2021's result of $1,23 billion.

2020-2023 Toyota Corolla Sedan Front Angle View Toyota 2020-2023 Toyota Corolla Sedan Rear Angle View Toyota 2021-2023 Toyota Camry Driving Front Angle Toyota 2021-2023 Toyota Camry Driving Back View Toyota
2020-2023 Toyota Corolla Sedan Front Angle View
2020-2023 Toyota Corolla Sedan Rear Angle View
2021-2023 Toyota Camry Driving Front Angle
2021-2023 Toyota Camry Driving Back View
Source Credits: Automotive News

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