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Own a car with Japanese parts? Drive carefully

New cars damaged in a crash are more likely to be sidelined by a parts shortage caused by the crises in Japan.

By MSN Money Partner Apr 13, 2011 4:35PM

This post comes from Susan Ladika at partner site CarInsurance.com.

 

Even if you're a safe driver, you might want to exercise extra caution behind the wheel these days. Even a minor collision could put your car out of commission for weeks, if not months, no matter how great your car insurance policy is.

 

The earthquake, tsunami and nuclear disaster in Japan have put the brakes on production of automobiles and spare parts, and no one can predict what kinds of shortages might ultimately occur or how long it will take for operations to resume to full speed again. Post continues after video.

"It continues to be a very tenuous situation," says Fred Hubacker, executive director and automotive expert with Conway MacKenzie, a Birmingham, Mich., firm offering restructuring and financial advisory services.

 

While the industry will recover, "it will take significantly more time and significantly more resources than anybody thought," says Hubacker, who has spent 36 years in the auto industry.

The crises stopped or slowed production, even at U.S. facilities. Cutting back on production can help conserve the existing supply of parts, says Bill Visnic, senior editor at Edmunds.com.

 

But even efforts to conserve parts don't guarantee that problems won't emerge. Visnic estimates there may be a 60-day supply of many parts, so if the impact of the crises is felt for months, it will "eat up all the buffer you have in your pipeline."

 

The flip side of efficiency

Some automakers are already prioritizing auto parts allocations. So, if you're involved in a wreck and need a part that's in short supply, "you are at the front of the line," ahead of requests to replace dealer inventory, Visnic says.

 

Particularly hard hit are electronic chip manufacturers, many of which are based in the areas that have been wracked by the earthquake, tsunami and ongoing nuclear disaster, Hubacker says.

 

"There are a multitude of different computers in every vehicle," Hubacker says, and they control things like the engine, transmission and anti-lock brake system. Most components are made by only one supplier and are calibrated to fit a particular type of vehicle, so they can't simply be interchanged.

 

Other types of parts are easier to exchange, and many auto insurers prefer to use aftermarket parts -- which are made by an independent manufacturer and are cheaper to produce -- than original equipment manufacturer (OEM) parts, which are made by your vehicle's manufacturer.

Chubb is one of the few companies that guarantees the use of OEM parts for its car insurance customers. Chubb spokesman David Hilgren says so far the auto insurer hasn't seen any impact "on the availability of OEM parts, but we're monitoring the situation."

 

Newest cars most likely to be sidelined

A potential parts shortage would have a far greater impact on owners of newer Japanese cars that are involved in an accident than on consumers who own older Japanese vehicles, Hubacker says. The older cars contain far fewer electronic components, and the parts for those vehicles are no longer produced, but instead are stockpiled in warehouses.

That's a big contrast to new vehicles, where manufacturers crank out parts both for the new cars coming off the assembly line, and the spare parts for them, he says.

 

And it's not necessarily all Japanese vehicles that might be affected, nor is it only Japanese vehicles that could see an impact. Even cars like the Chevy Volt "have a couple of critical components" that come from Japan, Visnic says. By contrast, most Toyota Camrys are made in the U.S. and contain a high percentage of domestic-made parts. "The more domestic content, the more insulated you are."

 

If production doesn't get back up and running at full throttle soon, Hubacker predicts you're "going to have a bit of a wait on your hands" if your car is involved in a collision, and "that will cause some real angst among consumers."

 

Got a spare car?

Given the uncertainty of the situation, now is a good time to check your auto insurance policy and see whether car rental reimbursement in case of an accident is included. Some policies include it as an extra benefit to consumers, while others charge a nominal fee for the coverage, says Pete Moraga, spokesman for the Insurance Information Network of California.

 

While some may balk at paying extra for coverage, "with the situation we're now seeing with repairs that may take longer because of supply issues, it may be a good thing," Moraga says.

 

All policies have limits. Rental car coverage typically costs $1 to $2 a month but typically caps how much it will reimburse each day and the number of days it will cover. So check your policy carefully to make sure you understand the terms of your agreement.

  

More on CarInsurance.com and MSN Money:

5Comments
Apr 13, 2011 7:51PM
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"...............so the dealers say,  the sooner you buy the car you want,  the better".
Why do that sound so typically disingenuous?

Apr 13, 2011 9:03PM
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And watch out for those glow-in-the-dark replacements when they start arriving.  Don't let anyone without a Geiger counter tell you they're not hot...
Apr 13, 2011 7:38PM
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Part shortage..

 

Thats pretty much standard over there isnt it!  lol

Apr 13, 2011 10:30PM
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Dont worry, China will step right up and dupe those parts for the US. We get everything else from there.
Apr 13, 2011 9:25PM
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Well the just in time parts system they use in japan probably won't work in this situation i'lld hate to need parts now.LOL
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