Suppliers Expect Toyota to Reduce Price Cuts Due to Weak Yen image

Toyota’s suppliers said the automaker might not ask them to cut prices as the weak yen will boost profit.

Over the last two years the strong yen made Toyota impose some reductions, but now suppliers expect these reductions to be eliminated during the April-September period. This week Toyota announced it has increased annual profit target by 10% and last month, President Akio Toyoda said that automaker in Japan begin to see ‘light’ as the yen continues to become weaker, with more than 17% against the dollar.

“With the yen now in decline, Toyota no longer has any real cause to sustain that pressure” on parts makers to cut prices, Issei Takahashi and Masahiro Akita, auto analysts at Credit Suisse Group AG, wrote in a report last month.

Toyota, which manufactures almost 45% of its vehicles in Japan, said it will maintain its domestic production of around 3 million units annually, compared with rivals Honda and Nissan which chose to shift some output overseas due to the increasing yen. Analysts predict that price cuts, which increased to 4% in fiscal years 2011 and 2012, will decrease to 1.5% this year starting April 1st.

“Analysts’ views are based on their own take of the situation, not decisions announced by Toyota,” said Dion Corbett, a spokesman for Toyota.