Will car prices rise after the earthquake in Japan?
Some U.S. dealerships drop discounts on small, fuel-efficient Japanese cars while automakers assess damage from the earthquake and tsunami.
In this global economy, disruption in car and car parts manufacturing in Japan is bound to be felt on our shores. Will it be negligible, like the tiny bit of radiation from the Fukushima nuclear power plant detected on the West Coast, or will prices for Japanese cars rise sharply while supply chains are assessed and repaired?
Some U.S. dealers say they're no longer willing to haggle on high-demand, fuel-efficient cars made only in Japan -- which means you may have to pay sticker price for cars like the Toyota Prius and Yaris, and the Honda Insight and Fit, The Associated Press reports. And concern that those cars will be in short supply has prompted more people to move on their purchase plans, reports USA Today. Post continues after video.
What will actually happen to the car supply in the coming months is a matter of speculation.
"For car shoppers who have become accustomed to the buyer's market that largely characterized the auto industry since the last fuel spike in 2008, and for years before that, the future could hold rude surprises," wrote Jonathan Welsh at The Wall Street Journal's Driver's Seat blog.
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Or maybe not. Says David Thomas at Cars.com's KickingTires blog:
There are solid supplies of most cars assembled in Japan on lots today, and many cars that rely on Japanese parts are readily available now, too.
We will likely see diminishing supplies in the next few months, but they shouldn't reach panic levels. You just might not get as good a deal, or the exact color or equipment you want on specific popular models.
Edmunds.com also doesn't see a dire shortage of Japanese-made cars, according to The Street:
"With increased demand, there could be constraints on availability and options," Edmunds said. "However, most closed production plants in Japan are scheduled to open the week of March 21, so it is unlikely at this time there will be shortages."
On the other hand, USA Today said:
"From all the things we're gathering, including memos from Japanese companies … the potential impact of the tragedy is a bigger deal" than they are portraying, says Jesse Toprak, analyst at auto researcher TrueCar.com.
Why is so much unknown? It's difficult to get a handle on how extensive the damage is to parts suppliers' plants, as well as to nearby infrastructure. There's also a matter of rolling blackouts. All of this is having a ripple effect on some U.S. auto plants. Automotive News said late last week:
But as the week ended, Japan's auto companies were still struggling to get information from their thousands of suppliers around that nation -- companies that also export materials and components to U.S., European and Asian customers. In some cases, purchasing managers in Japan couldn't even communicate with suppliers let alone assess the damage to the parts plants.
Added Bertel Schmitt at The Truth About Cars:
From the little we know, the situation at many tier 2 and 3 suppliers could be grim. This, and the rolling blackouts, affects all makers. Through March 23, plant shutdowns will have caused 285,000 units of lost production amongst all Japanese automakers, says the global forecasting firm IHS. More than 100,000 of those are from Toyota.
Of course, the auto industry will not be the only one affected by interruptions in the supply chain. Kim Peterson wrote at our sister blog Top Stocks:
The earthquake may cause supply shortages for the iPad 2 from Apple (AAPL), according to research firm iSuppli. The company has found five key parts of the iPad 2 that come from Japanese manufacturers, including the tablet's NAND flash memory, electronic compass, system battery and touch-screen overlay glass.
Here's a breakdown of the closures and scheduled reopening of Japanese auto and electronics plants.
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