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Automobiles

Volkswagen hikes prices in Japan by up to $1,000

Inflation and material costs drive trend by Mercedes and other foreign carmakers

A production line for the Golf at a Volkswagen plant in Germany. The German automaker plans substantial price hikes in Japan during October.   © Reuters

TOKYO -- Volkswagen joins the list of foreign automakers that are raising prices on vehicles they export to Japan, Nikkei has learned, making a move that domestic players have been hesitant to do amid sluggish consumer spending.

Volkswagen's biggest price hike applies to the Tiguan R, which now sells for 6.89 million yen ($62,000) but will cost 102,000 yen more in October. Fellow German automaker Audi will raise prices on vehicles by as much as 150,000 yen as well.

Five of the 10 top-selling imported brands are raising prices this fall. Peugeot and Jeep, both under the European automaker Stellantis, have lifted prices.

Mercedes-Benz already raised prices on some models, with the maximum increase set for 500,000 yen. The automaker previously kept Japanese prices largely stable, save for equipment changes, but is passing on the higher costs of materials to consumers for the first time in six and a half years.

"We've reached the limits of corporate effort," said a source at Mercedes' Japanese arm.

Prices of copper, precious metals and semiconductors have climbed on a tight supply and demand balance. Ports have become congested due to the pandemic fallout, causing marine shipping rates and other logistics costs to soar.

Japan's currency has weakened to around 110 yen per dollar from the 103- to 104-yen level at the start of the year, driving up the cost of imports.

European automobiles command strong brand appeal in Asia, supporting buoyant prices. But prices in Japan are lower than those in China. The Mercedes-Benz S500 costs 17.38 million yen in Japan, but in China is priced at the equivalent of over 30 million yen. This disparity apparently reflects Japan's smaller affluent class.

Higher prices are coming to Japan's service sector, too. Tokyo Disney Resort operator Oriental Land lifts ticket prices Friday, with the maximum paid by adults rising 8% to 9,400 yen. But the minimum weekday price has been reduced to ease weekend traffic.

Tokyo Disney's top price remains cheap by international standards. California's Disneyland theme park charges up to $154. Shanghai Disneyland costs as much as 699 yuan ($108) to enter.

Netflix raised its standard plan in Japan by 13% during February to 1,490 yen. The level approaches the $13.99 monthly fee in the U.S., which itself was hiked by 8%.

With Japan's economic recovery on weak footing, wages have struggled to climb. The average monthly wage of an average worker stood at 307,700 yen in 2020, government data shows, up only 0.55% from the previous year.

In stark contrast to foreign automakers, Japanese corporations have expressed caution against price hikes. They worry that such a move will undermine domestic demand amid current conditions.

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