The increases by manufacturers including the two German companies as well as France’s Renault do not fully reflect developments such as the war in Ukraine and the yen’s recent nosedive.
These are raising the upward pressure on costs, pushing even hesitant Japanese automakers to rethink their price strategy.
Imports can more easily pass on higher costs to car buyers because “there are many customers who will buy based on brand even if the price is high, so hikes don’t have much of an impact”, said Seiji Sugiura of the Tokai Tokyo Research Institute.
Volkswagen this month raised prices by an average of 2% on almost a dozen models including its signature Golf, with the largest increase amounting to ¥138,000.
This followed a round of slightly smaller hikes last October.
Mercedes lifted prices about 1% on two C-Class models in February.
The luxury carmaker did its first hike for an electric car in Japan, raising its EQC400 by ¥650,000 to ¥9.6 million, or about US$78,000.
Prices on Jeep models from Stellantis climbed as much as 13% in March, with the Wrangler sport utility vehicle seeing the largest rise at nearly US$7,000.
The automaker lifted prices for other models in January.
Commodity markets are among the main factors driving the trend.
There has been a broad rally in metals used in auto manufacturing, including palladium, rhodium and particularly steel, which makes up half of a car by weight.
The Ukraine conflict has raised concerns about palladium, as about 40% of the world’s supply comes from Russia.
Palladium could become the biggest supply constraint on the auto sector, S&P Global said in a recent report.
Shipping costs have also climbed.
When auto factories around the world halted production in the early months of the pandemic, marine transport companies were left with excess capacity on car carrier ships and moved to pare their fleets.
Production later rebounded as economic conditions improved, despite the ongoing chip shortage.
Shipping lines now lack the capacity to meet growing demand, and new ships can take two or three years to build.
More price hikes are likely on the way in Japan’s auto market because the latest increases were decided before the yen’s recent sell-off.
According to the Japan Automobile Importers Association, budget models priced at less than ¥3 million made up only about 16.3% of sales last year, down 24 percentage points from 2011, while vehicles costing ¥8 million or more jumped 7 points to 15.4%.
Japanese automakers are reluctant to raise prices at home, since they usually only do so when they update their models.
Japanese consumers tend to be less willing to accept price increases for domestic cars than for imports.
“There are eight major automakers in Japan, so competition is fierce,” an automotive executive said.
“We don’t want to drive would-be customers away by raising prices.”
But surging costs are testing Japanese players’ limits.
Honda Motor said it was not yet considering a price increase when it reported earnings in February, outlining plans to slash costs instead to make up for rising materials prices.
But it signalled openness to the idea “in the context of price competition with other carmakers”,
Suzuki Motor also considers price hikes a potential option.