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Toyota keeps '07 Corolla prices down

Toyota Motor Corp. said Friday that it is keeping Corolla prices almost flat for the 2007 model year despite rising material and energy costs.
/ Source: The Associated Press

Toyota Motor Corp. said Friday that it is keeping U.S. Corolla prices almost flat for the 2007 model year despite rising material and energy costs. Analysts say Japan's No. 1 automaker may be fearful of yielding market share to low-cost Asian rivals.

The $100 sticker-price increases, well below the rate of inflation, come as Toyota's share of the American market continues to grow, mainly at the expense of U.S. makers General Motors Corp., Ford Motor Co. and the Chrysler Group of DaimlerChrysler AG.

The average Corolla price will increase 0.6 percent, Toyota Motor Sales USA said in a news release from its Torrance, Calif., headquarters. It said it is raising prices by $100 across the board when the 2007 models hit showrooms in August.

Base prices will range from $14,205 for a Corolla CE with a five-speed manual transmission to $16,215 for the LE with an automatic transmission.

U.S. consumer prices, excluding energy and food, rose at a 3.8 percent annual rate in April-June, the U.S. Labor Department said.

With its growing market power, Toyota might have been expected to raise prices more aggressively.

Last year, Toyota Chairman Hiroshi Okuda briefly floated the idea of Japanese car companies raising prices or finding some other way to give GM and Ford a boost and head off a possible protectionist backlash.

But Toyota's price decisions seem to have less to do with competition with America's struggling Big Three and more to do with its traditional Japanese rival, Honda Motor Co., and its rising South Korean challenger, Hyundai Motor Co., analysts say.

"They're much more concerned about Honda and Hyundai breathing down their neck," said Kim Hill, assistant director of the Center for Automotive Research in Ann Arbor.

Toyota had a 13.1 percent share of the U.S. vehicle market in 2005, compared with 9.3 percent in 2000.

For the first five months of the year, Toyota's share stood at 14.6 percent. GM had 23.5 percent, Ford 17.4 percent and Chrysler 13.7 percent.

"They certainly want to keep the market share trends," Hill said. "They see there's market share to be taken. Somebody's going to take it."

That somebody could prove to be Hyundai, whose quality ratings have risen as its costs remain low. Ahead are China's automakers, preparing to enter the U.S. market.

Toyota is no sloth when it comes to containing costs, said analyst Michael Robinet of CSM Worldwide.

"Toyota has long been very good at wringing costs out of vehicle-making, both on the supplier and manufacturing levels," he said. "That allows them to only raise prices 0.6 percent."

"They're doing it because they can do it," Hill said. "They made a lot of money last year. ... They want to run their plants full tilt."