Yen’s Rise Forces Japan to Boost Prices in U.S.

The yen’s unabated appreciation against the dollar is forcing many Japanese manufacturers to raise prices on exports to the United States for the second time within four months.

Some Japanese exporters are not raising prices as much as they did the first time, fearing they might lose customers in the United States, their largest overseas market. Some say they are considering three-stage price increases to minimize the impact on consumers.

The dollar’s sharp decline began after a Sept. 22 meeting of finance ministers from the United States, Japan, West Germany, Britain and France, who agreed to bolster non-dollar currencies as a way to help the United States reduce its trade deficit, which totaled $148.5 billion in 1985.

A depreciating dollar makes U.S. exports cheaper and therefore more competitive. Conversely, it makes Japanese and other products more expensive in the American marketplace.

The dollar is trading at the 180-yen level, compared to 240 yen before the September meeting.

Profit Margins Smaller

Profit margins have shrunk sharply among Japanese auto makers, who are heavily dependent on the United States. Toyota Motor, Japan’s largest auto maker, estimates that it loses 2.5 billion yen in earnings, or nearly $14 million, each time the dollar declines 1 yen.

Toyota raised prices of U.S.-bound cars and trucks by an average 3% in February and says it is considering another increase.

The second-largest auto maker, Nissan Motor, raised U.S. prices in December by an average of 4%. Nissan officials say they will likely have to boost prices further for new models this spring.

Honda Motor became the first Japanese auto maker to raise prices for the second time because of the strong yen. It announced a 3.6% increase for U.S.-bound models Monday. Honda raised prices 4% on Dec. 2.

In the machinery industry, Komatsu Ltd. and Hitachi Construction Machinery recently announced 5% price increases on exports to cover increasing losses that they attributed to the yen’s rise.

Komatsu, the second-biggest maker of construction machines behind Caterpillar Tractor of the United States, first raised prices by 10% in November.

In the electric appliance and electronics industry, Matsushita Electric Industrial, maker of Technics, Panasonic, National and Quasar brand products, says another round of price increases is inevitable. Matsushita decided in January to boost prices of all U.S.-bound goods by 5% to 10%.