Toyota Motor Corp. agreed Wednesday that demands by its union for annual salary and bonus hikes will be fully met in the new fiscal year, President Akio Toyoda has said.

Nissan Motor followed suit with the same response to its own union's demands after Toyota's announcement, in a sign of broadening momentum towards wage hikes needed to stoke a virtuous cycle of wage growth and private demand.

Prime Minister Fumio Kishida has urged profitable Japanese firms to raise pay by 3% or more to help achieve his "new capitalism" agenda, aimed at boosting wealth distribution.

Neither Toyota nor Nissan revealed the extent of the pay hikes immediately.

The decisions at the two major automakers were made during the annual labor talks held at the blue-chip companies, a week before the talks are set to conclude on March 16.

Toyota, the largest automaker, has long served as a pace-setter for the annual wage talks, followed by not just the auto sector but other industries including smaller enterprises.

"I'd like to thank all those unionists who did the utmost for the future of the auto industry, despite uncertainty on the outlook amid the coronavirus and a chip shortage," a Toyota labor union official quoted the president as having told a meeting between labor and management.

"We will pay salary and bonuses in line with their demands," he added, confirming that the union's demand was fully met during the third round of the talks for 2022.