How will the American consumer, who is trying to cut costs amid a sour economy, react to this?

Toyota raising prices on some models in US this month

TOKYO (AP) -- Toyota Motor Corp., the world's second-biggest automaker by annual vehicle sales, is raising its prices on some U.S. models later this month amid increased worries about its profit growth in the American market.

The price increases, which will start in the middle of May, include a hike of $200 on the 2008 Yaris sedan, which will cost $12,425. The 2009 Camry will go up $200 to $18,920, the automaker's U.S. unit said in a statement released Friday.

The hybrid Camry, introduced as a 2007 model in late 2006, will cost $300 more, at $25,650, Toyota said.

Like other Japanese automakers, Toyota is enjoying sales growth while American automakers are struggling. Soaring gas prices have increased demand for smaller, fuel-efficient cars that Japanese automakers are reputed for.

Toyota, whose US marketing headquarters is in Torrance, faces a challenge in maintaining profits partly because of the recent decline in the dollar, which erodes the value of overseas earnings of Japanese exporters. Worries are also rising about how a U.S. economic slowdown may hurt sales.

Toyota is set to release financial results Thursday, when it could report its first profit drop in nearly a decade.

But it's still faring better than its U.S. rivals. GM lost $3.3 billion in the first quarter. Ford had a surprise profit of $100 million for the same period but expects to lose money this year as the U.S. auto market deteriorates.

Atsushi Kawai, auto analyst with Mizuho Investors Securities in Tokyo, said the price increases of about 1 percent won't make up for the damage Toyota's bottom line is expected to suffer from the weak dollar. The dollar, trading at about 114 yen last year, fell below 100 yen in March and is now trading at around 105 yen.

But he noted Toyota raises prices about this time every year, and the hike was routine.

"Outside people are the ones giving special meaning to the decision" because of the concerns about the U.S. market, he said in a telephone interview. "It is a fact that Toyota is losing some of its momentum."

General Motors Corp., Ford Motor Co. and Chrysler LLC saw double-digit U.S. sales declines last month compared with April 2007. Toyota's U.S. April sales, meanwhile, edged up 3 percent. But during the same period, Honda Motor Co.'s and Nissan Motor Co.'s U.S. sales were up about twice that much.

Nissan already raised U.S. prices in April by $170 to $480 on models including the Versa Hatchback, Altima sedan, 350Z Roadster and the Pathfinder sport utility vehicle. Honda said it has no plans so far to raise its U.S. prices.

Kawai said more time was needed to assess whether Toyota sales will continue to lag even after new models, including the remodeled Corolla, come out.

Toyota is also raising the U.S. prices of some Lexus luxury models. For example, the price of the Lexus IS 350 entry sports sedan will rise $300 to $36,305. The pricing of the 2008 Lexus IS F high-performance sports sedan won't change, Toyota said.