TOYOTA Motor Corp, Japan's largest auto maker, will raise prices on some models in the country for the first time in 16 years, paving the way for smaller rivals to pass on higher costs for raw materials to customers.

The base price of the Prius will rise by 3 percent to 2.38 million yen (US$21,600) and the Harrier hybrid sport-utility vehicle will increase by 3 percent to 4.76 million yen, the company said in a statement yesterday obtained by Bloomberg News.

Prices for most of its commercial vehicles, including Dyna trucks and Coaster buses, will rise 2 percent on average.

Toyota, along with rivals Honda Motor Co and Nissan Motor Co, have forecast lower earnings this fiscal year, partly because of rising material costs. The three car makers, which have boosted prices overseas, have hesitated to do so domestically after Japan's stagnant wages dragged down vehicle sales.

Nissan said it may follow Toyota in raising commercial vehicle prices. 'This will allow domestic prices to match those overseas,' said Koji Endo, an auto analyst at Credit Suisse Securities (Japan) Ltd in Tokyo. 'It's possible Toyota may raise prices on other models in Japan.'

Toyota in May agreed to pay Nippon Steel Corp Japan's largest steel maker, as much as 30,000 yen a ton more for steel. 'Price increases in raw materials have been larger than Toyota's cost-reduction efforts are able to offset,' the firm said in the statement. This is the first time since 1992 for Toyota to boost prices of its vehicles without remodeling.

Nissan Chief Executive Officer Carlos Ghosn has urged Toyota to pass on rising costs to customers to make it easier for smaller companies to follow. Nissan forecasts net income in the year ending March 31 will fall 30 percent.

'We're considering raising prices on commercial vehicles,' as they use more steel than passenger cars, said Mitsuru Yonekawa, a Nissan spokesman.

At Honda, higher raw-materials costs will trim operating profit by 199 billion yen this fiscal year, more than double the initial company estimate of 74 billion yen, Executive Vice President Koichi Kondo said on July 25.