SOARING material costs have forced Toyota considering raising prices in Japan without a model makeover for the first time in three decades, the Japanese auto maker said yesterday.

Speculation has been rife that Toyota Motor Corp would be forced to announce higher prices in Japan ?? a move even Toyota acknowledges could be critically damaging for an already sluggish Japanese market.

With steel prices surging, Nissan Motor Co Chief Executive Carlos Ghosn has hinted that he is waiting for its bigger rival to take the lead to make it easier for others to follow suit.

Japan's top business daily The Nikkei reported yesterday that Toyota plans to raise prices only on some models, including the Prius gas-electric hybrid, by 1 percent to 3 percent.

Toyota spokeswoman Kayo Doi had no comment on the report. Still, Toyota has been forced to consider raising prices without remodeling as cost cuts weren't keeping up with rising costs of steel and other raw materials, she said. 'We are reluctant to raise prices in Japan because the market is so sluggish. But we have no option but to consider it.'

Like other auto makers, Toyota has raised its United States prices without major model changes previously. But the last time Toyota raised prices on Japan models was in 1974, by 10 percent, in the wake of the first oil shock. It also hiked prices in 1973, by 7 percent, as well as on its commercial vehicles such as trucks and vans in 1992.

The rest of the time, Toyota has not raised prices in Japan except for remodeling that happens only once every several years in which improved features are added.

Toyota, the maker of the Corolla subcompact and Lexus luxury models, boasts a reputation for fuel-efficiency, and has averted some of the serious troubles of its US rivals General Motors Corp, Ford Motor Co and Chrysler LLC.






But even Toyota has been struggling to fight skyrocketing gas prices, the crunch of material costs and fears of stagnation on global markets.

Japan has a massive, efficient public transportation system, and most urban Japanese are only weekend drivers. Car purchases have been sluggish in Japan for years, although Toyota remains the top seller there.

Toyota recently reported a 28-percent nose-dive in fiscal first quarter profit compared to the previous year. It has forecast its first full-year profit decline in seven years as it faces more problems from the weakening US market.

Last month, it lowered its global sales target of 2008 by 350,000 to 9.5 million units, blaming the sluggish North American market.