Japanese Destruction Leads to Higher Car Prices, Part II

Earthquake damage at the Toyota factory in Miyagi

Toyota has told all thirteen of its U.S. plants to prepare for a possible shutdown because of parts shortages from Japan. Honda extends its shutdown of Japanese assembly plants through April 3.

Nissan will continue producing at least until further notice and may even bring U.S.-made engines to Japan. GM stopped production in one engine plant and idled its pickup assembly plant in another. Suzuki has been out, and Mazda sees shortages ahead.

So these parts stoppages are sporadic, uncertain, and beginning to spread across the globe. The earthquake/tsunami’s effects were so horrendous that damage assessment has been slow, not to mention human rescue efforts and recovery of infrastructure. The latter will take years. You saw the pictures.

LeftLane reports Nissan chief Carlos Ghosn suggesting that “there are roughly 40 component suppliers in Japan that ‘remain in difficulty.’” Ghosn mentioned that the three hardest hit areas for auto production include electric/electronic components, plastics, and rubber. Just-in-time production, Toyota’s gift to the car industry, means very low parts inventories, and if one is missing, well, your car (with maybe 20,000 parts) won’t get built.

All this delay and uncertainty means higher prices coming for Japanese cars and, one assumes, other products. GM’s North American Operations President Mark Reuss stated that the impact of the supply line crisis and the plant closings could be “bigger than anyone knows today.”

One of the first areas to feel the impact has been the used-car market. Prices for the Toyota Prius have gone up about 6 percent in March alone, the greatest rise coming this last week. With increasing gas prices, which we recently discussed, and the whopping cost of new cars, I think the situation could well be more dire than tgriffith reported earlier this week.

As he hinted, if you’ve got a Japanese car, now might be a good time to sell it. Check out our new Instant Market Value analyzer to see what it’s worth in your market. To which we add: You just might find some bargains in “less-desirable” U.S.-made gas guzzlers. Don’t tell anyone I recommended this – you just happened to discover them on DealFinder.

Will Americans come back to U.S.-made (that is, U.S.-assembled) cars because of the disaster in Japan?

—jgoods

Find Used Cars in Your Area at CarGurus

Used Toyota Prius

3 Comments

  1. Of course, higher import prices will lead to higher domestic prices. Our own producers will gladly raise their own prices rather than taking advantage of a temporary boost in import prices, which really only helps offset the effects of asian currency manipulation on our own market.

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