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Toyota Raising Prices – Cutting Incentives

Will others follow – or could it backfire?

by on Apr.01, 2011

Dealers have been tacking on as much as $3,000 extra for the Toyota Prius, lately. Now the maker will raise its prices, as well, by more than 2%.

Toyota plans to raise prices on almost its entire line-up on May 1st, a move many observers had anticipated in light of the Japanese auto meltdown that has cost the maker hundreds of thousands of units in lost production.

Dealers have already begun raising prices, according to various reports, hoping to take advantage of the supply shortage, which is expected to grow worse in the coming weeks, and analysts say the giant Japanese maker is hoping to get its share of the potential bonanza.

But in light of the maker’s worse-than-expected 5.7% decline in sales during March, some observers warn that Toyota may be setting itself up for further setbacks.

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The increases average about 2.2%, though they vary by model and brand, with some slower selling models, like the Scion xD, seeing prices rise by as little as 0.4%.

“It’s Business 101,” says analyst Jim Hall, of 2953 Analytics.  “It’s supply-and-demand and they’re trying to make up the revenue they’re losing with the rolling blackouts in Japan cutting production.”