Toyota Management Caught In A Struggle Between Profit Or Sales

The Nikkei reports that Toyota Motor Corporation’s restriction of price increases in Japan to hybrids and commercial vehicles resulted from internal dissension in the company over whether to prioritize sales or profitability.

Focused on improving earnings, Toyota’s planning and finance divisions pushed for price hikes. Barely profitable domestic sales have taken a bruising from sky-high materials prices. And in the US and Europe, sales are in the doldrums. With group net profit for the April-June quarter plunging 28%, Toyota risked missing its full-year earnings target if nothing was done. The two divisions insisted that a markup was essential because of limits to cost-cutting efforts.

The sales division, on the other hand, was wary. It feared plummeting sales if prices were raised on a wide variety of models. Even without upping prices, the domestic market has been sluggish. Toyota’s domestic sales have fallen for three straight years, and the company had just trimmed its sales outlook for 2008. Some dealerships also opposed the hikes, recalling the huge drop in sales after prices were raised during the first oil crisis.

The decision was made to limit price hikes to models such as the Prius that face little competition.
 

kpaxx - 8/26/2008 11:00:19 AM

+4 Boost

Toyota starting to look a lot like GM!

Agent63 - 8/26/2008 6:05:05 PM

0 Boost

indeed

sector - 8/26/2008 11:36:16 AM

-1 Boost

Toyota's are underpriced already for the quality of car you get, nice to see them show some restraint in decision making as not to be so greedy like BMW with their price hikes.

michal1980 - 8/26/2008 12:04:53 PM

+1 Boost

underprice, you mean like the matrix, which is about 1000 dollars more then a similar vibe?

theoptimisticpessimist - 8/26/2008 12:46:17 PM

-1 Boost

"greedy like BMW with their price hikes."

Are you familiar with the currency market? While the dollar has strength some it is still far weaker against the euro than the yen.

theoptimisticpessimist - 8/26/2008 5:15:39 PM

+1 Boost

"HONG KONG (MarketWatch) -- Toyota Motor Corp. Monday said it will raise retail prices of some hybrid and commercial vehicles in Japan from Sept. 1 to offset higher raw material costs. The automobile giant will increase prices of the Prius and Harrier hybrid vehicles by 3%a'

I guess Toyota a little greedy.

BigShow50 - 8/26/2008 12:04:49 PM

+2 Boost

kpaxx you are quite the big nipple on a "tit" with those comments...no where close to looking like GM, remember Toyota and other companies that are not like GM, do not allow themselves to get buried...and actually work out the problem with positive results, opposed to GM thinking that pumping billions of dollars in the R&D SUV segment will save the world, especially themselves..."Big Nipple"...LMAO!!!!

91z4me - 8/26/2008 1:00:15 PM

0 Boost

Come on BigShow,

Tell me what company I am talking about: launches a fullsize pickup and SUVs just before prices jump, introduces a brand new midsize sedan which is quickly toppled from the top of it's class, while being #1 in sales saw quality drop from prior years.

Come on, you can get this right.

Agent63 - 8/26/2008 7:49:24 PM

0 Boost

99% profit loss isn't the right thing.

g2ok - 8/26/2008 1:33:54 PM

+1 Boost

Toyota is conservative and process driven, so deciding between profit and sales will be a measured and thoughtful approach. Toyota and Honda are run very differently than our companies. The guy at Ford knows it for a fact.

AmazonPrinceIS350 - 8/26/2008 3:16:21 PM

+2 Boost

Toyota better look at what GM and others have done and not follow the same route because that is where greed will take you.

num1insales - 8/27/2008 3:13:14 PM

+1 Boost

There is a reason why the market value went down on every import besides nissan from july 07 to july 08. Nissan has more vehicle to offer for less money and better rebates. Toyotas are over rated and the quality it worse than dodge and jeeps, if thats not bad than please tell me what is.....