Toyota/Lexus distributor UMW Toyota Motor announced today that it will be increasing the prices of cars under both brands effective next January. The price increase will vary between 4% and 16% across all models.
Details of the price increases will be available soon.
The company said it was left with no other choice but to pass on some cost to the consumers to offset rising input costs due to the strengthening of the US dollar against the Malaysian currency.
Year-to-date, the ringgit has depreciated by almost 20% to the US dollar, thus increasing cost of operations for UMW Toyota.
“Since the beginning of this year, the fluctuation of the ringgit has affected our business as some of our parts and components are imported, resulting in an increase in overall cost of production," said UMW Toyota Motor president Datuk Ismet Suki.
"We have implemented cost-efficiency measures and reviewed our operations across the supply chain to mitigate the weaker ringgit," he added.
“The company would have implemented necessary measures to minimise forex losses impact and address the fluctuation of ringgit if it dropped gradually. Unfortunately, the sudden and huge fluctuation of ringgit within a short period, has given great impact to our operations. Hence, the company will have to increase the prices of Toyota and Lexus vehicles effective January 2016. The increase is inevitable as there is no clear indication on when the ringgit will rebound.”
Market analysts said they expect UMW Toyota Motor's move to raise car prices would erode sales.
“We believe cost-conscious potential car buyers will opt for cheaper alternatives when making their purchasing decisions,” said CIMB Equities Research.
Other car makers might also increase prices - either quietly or with a public announcement.
BMW Group Malaysia last month had said that the company may adjust upwards the selling prices of its cars next year if the ringgit continues to weaken against the euro.
Its managing director and chief executive officer, Alan Harris, had said that importers would face financial pressure when the local currencies were devalued.
Mercedes-Benz Malaysia Sdn Bhd said it will maintain prices over the short-and medium-term, while Ford said it would not raise the prices of its pick-up trucks.
Meanwhile, DRB-Hicom Bhd’s group managing director Tan Sri Mohd Khamil Jamil had said last week that the company had no immediate plans to increase the prices of cars under its stable, which includes Proton.
