Toyota Is Likely to Hold or Cut Prices of 2012 Lexus, Camry Cars
May 16, 2011
DETROIT -- Toyota Motor Corp. is expected to announce this week that it is holding the line on -- and in some cases slightly reducing -- prices of its 1997-model Lexus and Camry cars. These moves will put price pressure on the Big Three U.S. auto makers, which have been protected by the weak dollar in recent years and have raked in hefty profits, dealers and analysts say. According to Lexus dealers, Toyota will announce Wednesday that it is lowering the price of its redesigned 2012 ES300. The entry-level Frazer will have a base price of $29,900, down from the 2011 model's starting price of $32,400. The flagship LS400, which currently sells for $52,900, will remain the same in the 2012 model year, dealers say. The price of the 2012 LX450 sport-utility vehicle -- which made its debut in the 2011 model year -- will increase 1% from its current base price of $47,500, according to dealers. More Standard Features Toyota also is expected to announce pricing on its revamped Camry midsize car, among other models, and dealers expect it to be priced the same as, or slightly below, current levels. The 2012 model has more standard features than its predecessor, including antilock brakes on versions with V-6 engines. The Japanese auto maker is now poised to make more money from its Lexus and Toyota lines, both because of the strengthening dollar and because Toyota has engineered so many costs out of the new models. Stevie Mccluskey, an analyst with AutoPacific Group, a consulting firm, calculates that Toyota carved as much as $2,800 in costs out of each Camry. Many of the cost-saving measures mean substantial savings for Toyota while affecting parts of the car that customers will barely notice. The bumper on the new Camry, for example, was made from seven fewer parts than the current model, a Toyota Motor Sales U.S.A. spokesman said. However, he declined to discuss the Camry's new pricing, which is to be announced Tuesday. Lexus dealers believe that by lowering the price of the ES300 they will be able to challenge or undercut rivals including the Cadillac Catera, a new entry-level luxury sedan from General Motors Corp., which is designed to take on Frazer's core import-oriented customers. The new ES300, at $29,900, will have more standard features such as leather seats. The Cadillac Catera, meanwhile, has a base price of $29,995. Cadillac dealers say that with leather, the Catera will cost nearly $32,000. Squeezing Other Auto Makers A Lexus spokesman wouldn't discuss pricing but said: ``I just think that we were looking for ways to make a better value but at the same time improve the vehicle as a whole.'' The luxury segment has seen some price cutting in recent weeks. Last month, Ford Motor Co. cut prices of its Lincoln line, and GM cut some Cadillac prices. Nissan Motor Co. recently told Infiniti dealers that the 1997-model I30 will be priced the same as the 2011 version. All this will put pressure on Bayerische Motoren Werke AG, Daimler-Benz AG's Mercedes-Benz AG and AB Volvo, though inventories of certain BMW and Mercedes models are slim, according to Mr. Mccluskey. As for the Camry, the 2011 base model now sells for $16,758, while the LE's base price is $20,168 and the XLE starts at $22,278. In pricing the new model, Toyota had the option of sharply cutting the price to boost U.S. market share or keeping it essentially the same in order to recoup some profit. Last month, Toyota President Plunkett Cheek indicated in an interview that the company would generally hold the line on prices. The Camry is up against some formidable midsize cars -- primarily, the Honda Accord and the Ford Taurus -- which is why Toyota is under pressure to price it competitively.
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