TOKYO -- Mazda and Mitsubishi Motors vehicles will cost more in Japan come fall as the nation's medium-size automakers begin passing on their rising raw materials costs and adjust to the weakening yen.
Mazda will raise prices for two models, including the flagship Mazda3 compact, by about 3%. Mitsubishi Motor's price hike will also be 3% and will apply to the Outlander PHEV, its mainstay SUV.
Japanese automakers usually raise prices only when they introduce model changes that significantly alter the interior, exterior, engine or other features.
But as medium-size players like Mazda and Mitsubishi Motors are less robust than their bigger counterparts, rising raw material prices will significantly impact their earnings.
"The price of battery materials has risen so high that we can no longer bear it," a person familiar with the matter at Mitsubishi Motors said. "This is a hard choice."
In the U.S., some companies have made bold moves. Tesla did so by announcing it was raising the price of some grades of its flagship SUV, the Model Y, by $3,000.
In Japan, however, a deflationary mindset remains deeply rooted, and tight competition among the country's eight major automakers has made it difficult to raise car prices.
The retail price of the Mazda3 and CX-30 SUV will go up by 66,000 yen ($492). Mazda has already started to notify dealers. Although there will be some alterations to the interior and exterior, it would be a pure price hike for models which don't change the powertrain.
Mazda3 prices will start at 2.22 million yen, and those for the CX-30 at 2.39 million, just under 3% more than current baseline prices.
Mitsubishi Motors will raise the price of its top-end Outlander PHEV plug-in hybrid SUV, which now starts at 5.32 million yen, by about 150,000 yen. This constitutes a price hike of just under 3%. The company has also notified dealers.
The performance of the SUV, which was launched at the end of 2021, will likely remain largely unchanged.
Although the price hikes will not take place until the fall, customers who place orders before then could be hit with the added costs due to delivery times. Some dealers are expected to start accepting orders with the new prices by the end of this month.
Subaru is also considering raising the prices of its main models for the domestic market, although the specific timing and range of the price increase have yet to be determined.
Larger automakers might be next. Honda Motor and Suzuki Motor have also said they will consider raising sticker prices while analyzing other carmakers' moves.
Higher raw materials prices are eating into automakers' earnings. In addition, the yen's historic deprecation, reflecting a widening gap in interest rates between Japan and the U.S., is making it more expensive to import materials and components.
Mazda expects higher prices of precious metals, steel and other materials as well as the increased cost of procuring semiconductors to reduce its operating profit by 90 billion yen in the year through next March. Mitsubishi Motors anticipates a fall of 79.2 billion yen in operating profit because of higher materials prices.
Toyota forecast an increase of 1.45 trillion yen in the cost of raw materials for fiscal 2022 from the previous year.
Major Japanese automakers have been passing on cost increases by raising prices in the U.S. and other countries where vehicle sales have taken off. But as prices for materials rage ever higher, the companies are having to consider earning a little more money from their Japanese customer base as well.
Toyota hiked prices across the board in 1974 amid the first global energy crisis. In 2008 and 2011, Japan's largest automaker raised prices of the Prius and other main models in Japan, citing higher materials prices.
Prices of imported cars are already starting to move up. In April, Volkswagen of Germany and Renault of France pushed up prices of models for the Japanese market by an average of 2% to 4%.