Tuesday, April 26, 2005

The American car industry may have reached bottom.

Business: How pathetic must you be that your competition even thinks of raising its prices to help you out?

TOKYO (Reuters) - 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. 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.

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