M Toyota may increase prices in US, to give GM and Ford time to catch their breath - WSJ (72.82 )

The WSJ discusses General Motor and Ford, saying that both are experiencing serious financial hardship. But, in a sign of a changed political climate, nobody in Washington is talking about bailing them out. Indeed, the loudest voice speaking out for helping the top 2 auto makers recently has come from, of all places, Japan. Toyota Motor Chairman Hiroshi Okuda told reporters that Japan's auto industry needs to give Detroit "time and room to catch a breath." He even suggested Toyota might raise prices on cars sold in the US to ease pressures on GM and Ford. But there's no sign that the White House or Congress is seriously contemplating any govt-led resuscitation of its own. Though Japan's 3 leading car makers are thriving and claiming a bigger share of the US auto mkt, industry analysts say neither GM nor Ford, despite their financial woes, is as troubled as Chrysler was when it received a bailout in the form of federal loan guarantees in 1979. When President Bush was asked on CNBC about GM's troubles last week, he said: "I think they're going to have to learn how to compete."

Toyota won't help U.S. rivals

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Toyota Motor Corp. said Tuesday it will not raise its car prices to help U.S. rivals, breaking with its chairman's comments a day earlier that voluntary price increases and other steps were in order to help restore health to the U.S. auto industry.

"Our basic stance is that prices are something for the market to determine," a spokesman at Japan's top auto manufacturer said. "We are not thinking about changing (vehicle) prices in order to help the U.S. auto industry."

Japanese brands collectively grabbed a record 30 percent share of the U.S. auto market last year, and some executives have become more sensitive about how their companies' success would play out at the political level.

At the annual motor show in Detroit earlier this year, Toyota President Fujio Cho and Honda Motor Co. Chief Executive Takeo Fukui said Japanese brands' expansion in the United States should not go unchecked, with Fukui volunteering that the combined share should be kept under 40 percent.

"I'm worried not only about GM but about the entire U.S. auto industry," Toyota Chairman Hiroshi Okuda told a news conference Monday as the head of Japan's biggest business lobby, the Japan Business Federation.

"Automobiles are the symbol of American industry, and if things go wrong there may be some kind of impact.

"As an automaker, we have to think about what countermeasures we can take," Okuda said, adding that technical alliances and voluntary price rises are possibilities.

A top Honda executive, however, mirrored Toyota's official stance that raising car prices to help the competition in North America was out of the question.

"I realize that GM, as well as Ford, are suffering financially," Executive Vice President Koichi Amemiya told a news conference at which Honda reported a fourth straight year of record earnings.

"But that doesn't mean you ignore the customer and raise your prices," he said.

Hit by falling U.S. sales and growing costs for employee health care, General Motors Corp. (Research) last week recorded a first-quarter loss of $1.1 billion, its worst result since the world's biggest auto manufacturer nearly went bust in 1992.

Its automotive operations lost almost $2 billion, most of that in North America as it offered thousands of dollars in sales incentives per vehicle to lure customers back. Even then, GM surrendered more sales to Asian brands, especially in the light trucks segment, its main cash cow.

Its rival Ford Motor Co. (Research) had a 38 percent drop in quarterly earnings and cut its North American production to reduce bloated inventories of unsold vehicles.

In contrast, Toyota and Honda, the world's most valuable auto manufacturers, are expected to report their best-ever earnings for the year that ended last month.

Japan's second-ranked Nissan Motor Co. reported its best operating profit for the fourth year in a row Monday.

GM Chief Executive Rick Wagoner has repeatedly complained that the yen is too weak against the dollar, giving Japanese auto makers an unfair edge.

Toyota and Honda have argued that they are building more than half of their cars sold in the United States locally, creating jobs for Americans.

Toyota said it was constantly studying what the appropriate price of its cars should be based on the competitive environment, costs and profits, but that it had no decision now on any changes to its prices in North America.

When President Bush was asked on CNBC about GM's troubles last week, he said: "I think they're going to have to learn how to compete."