On one hand, higher pump prices typically mean an uptick in sales of fuel-saving hybrids and electric vehicles. But on the other, soaring inflation means higher costs for those vehicles.
Toyota expects raw material costs to more than double from last year.
But even that outlook is clouded by uncertainty over inflation in markets such as the U.S., lingering semiconductor supply chain woes, pandemic lockdowns in China and the ongoing war in Ukraine.
“These factors will be compounded,” Chief Communications Officer Jun Nagata said.
“This fiscal year, it’s going to be even more difficult than other years to make a forecast.”
Toyota believes rising raw material prices will take a big bite out of its profits this year. And electrified vehicles — which require specialized metals and rare earth elements for their batteries and motors — will feel a disproportionately big hit, Chief Technology Officer Masahiko Maeda said.
“Material prices tend to manifest more seriously in BEVs,” Maeda said. “The higher cost for materials and batteries does have a huge impact on overall cost structure.”
Maeda said customers are very sensitive to price fluctuations. So Toyota will be conservative in passing along costs through higher sticker prices, he said.
While there are some vehicles and regions that may accommodate price increases, other markets and models won’t.
Higher prices have been exacerbated by tight inventories as chip shortages crimp production.