Toyota contemplates price hike in emerging markets like India, Brazil
Japanese auto giants, Toyota Motor Corp, Headquarters in Toyota, Aichi, Japan, are being faced with weakening value of local currencies in emerging markets. To counter this effect, the company is considering a hike in vehicle prices in the respective markets.
While Toyota Motor Corp is keen to raise prices of their models in emerging markets, it is an area where they will have to tread cautiously so that these increased prices do not have an adverse effect on sales. Depreciating currencies in Brazil and other emerging markets (including India), have taken a huge slice off the company’s profits pie. This is noted specially where vehicle are built locally, as part procurement and exports to countries with weaker currencies takes its toll on cost of the vehicle and company’s profit margins.
Though little impact is seen from either Dollar or Euro, it is as the company expands to new and emerging markets that there is wider discrepancies in currency fluctuations causing constraints on profits of the company leaving Toyota Motor Corp no other recourse than to increase prices.
When taking foreign exchange into account, Toyota surmises that fluctuations will reduce operating profits by 95 billion yen (Rs 5,593 crores or $934 million) this fiscal. This will reduce profits to 0.3% during the fiscal following record profits reported in the previous fiscal.
via Japan Times