Toyota Won’t Raise Prices to Help Rivals

0

Toyota Won't Raise Prices to Help Rivals

There was a surprising headline yesterday that said Toyota *was* considering raising prices to “help” Ford and GM. Here is a link to an Auto Blog discussion of that. According to the Wall St. Journal, Chairman Hiroshi Okuda told reporters that Japan's auto industry needs to give Detroit “time and room to catch a breath.” When asked about the U.S. auto industry last week, though, President George W. Bush said: “I think they're going to have to learn how to compete.”

Today, however, a Toyota spokesman says that “the market” sets prices.

That's a reminder of the old formula — for a mass producer, Price = Cost (plus) Profit, as if profit is an entititlement (and it wasn't for GM last quarter). The lean model, however, says Profit = Price (minus) Cost, where the price is set by the market. A lean producer will focus on reducing costs to hit profit targets, not insisting that they need to raise prices to hit those pre-ordained profit targets. I hear the latter from executives at my company, which always bothers me. We need to be cutting costs internally and helping our suppliers cut costs through lean methods. What do you see at your company?

 

Note: Comments have been turned off for the time being to try to shut down excessive spam/bot traffic to the site. If you'd like to add a comment, please share the post on LinkedIn or Twitter with your comments and thoughts.

Subscribe to get notified about posts via email daily or weekly.

close

Get New Posts Sent To You

Leave A Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.