Japanese car shortages could drive up prices

As the death toll mounts and Japan continues to cope with the horrific devastation wrought by the recent earthquake and the resulting tsunami, the tragedy's economic impact is and should remain a decidedly secondary consideration for the Japanese and, for that matter, the entire international community. A consideration of how the catastrophe will impact the automotive industry, then, seems particularly meaningless and, relatively speaking, it is - so much so that this transportation reporter, who is partly of Japanese descent, debated whether to write one at all. Car companies, nevertheless, are crucial to Japan's economy and, indeed, they have become an ingrained part of Japan's culture. So perhaps there is some utility in considering how they have been impacted and what effect that may have on their customers here in the United States.

"I offer my prayers to all those who lost their lives ... as well as my sympathy to the survivors and their families," Akio Toyoda, the president of Toyota, Japan's leading automaker, said in a statement. "[W]e will do our utmost toward the realization of recovery."

That realization of recovery will be a long road for Japan and may be as well for Mr. Toyoda's company and its automotive competitors. The quake understandably forced Toyota as well as other Japanese automakers to temporarily halt production. For Toyota alone, only a three-day shutdown meant foregoing the production of some 40,000 cars. As Christine Tierney of The Detroit News put it, "Japan's mighty auto industry is at a standstill".

As for the impact on American car-buyers, according to Edmunds.com Senior Analyst Michelle Krebs, more than two-thirds of Japanese cars sold in the United States are built in the United States - including 79 percent of Hondas, 72 percent of Toyotas, and 65 percent of Nissans - which means those companies' dealers in the U.S. will be "sufficiently stocked to weather a temporary disruption of imported models".

Although the shortages of Japanese cars in North America are not likely to be drastic, Edmunds.com Chief Economist Lacey Plache predicts that there will be an impact on sticker prices.

"I think the most likely outcome is that we will see new car prices rise," says Plache. "[T]here will be shortages on the Japanese cars built in Japan and sold here, thus driving up prices for these cars and putting less pricing pressure on their non-Japan built competitors".

One automotive market segment where supply will likely dwindle is hybrids, whose popularity in the United States is predictably rising along with climbing gas prices. "Japanese hybrids and small cars, with few exceptions, are produced in Japanese plants," explains Jessica Caldwell, director of pricing and industry analysis at Edmunds.com.

Even as they reel from the disaster themselves, all of the major Japanese automakers are donating millions of dollars as well as resources like power generators and other equipment to help with the recovery.

"With life the number-one priority, we want to do all we can to contribute to the relief efforts," Mr. Toyoda said in his statement.

[pattymarie8448]

I say more of us need to buy hybrid and eco cars. I recently searched for a hybrid for 6 months and ended up buying a Chevy Cruze Eco. I get up to 40 mpg brand new so can hardly wait until it is broken in.

Why has someone not come up with something where we do not need to rely on gasoline for the cars? Would the oil companies pay them off not to if they decided to do that? Is the oil industry like a mafia? For some reason they do not even need to give a reason why the gas prices are so high. They know they can! It's killing our economy!

[magnumdr]

Are you trying to tell us that the oil companies that are ripping everyone off at the gas pumps have nothing to do with these car prices going up? The truth is that all of the oil companies are price gouging all of us at the gas pumps. According to finamcial reports on earnings the oil companies are making 1/2 a billion dollars per "DAY". That seems to be price gouging people, dont it? I also think that no CO has the right to make over $500,000 per year in wages! How much do you make?

[rockcutr]

This is just hype for the auto mafia to continue to crap on the customer in the american/republican/psudo-capitalistic/comunistic ways of their recent past. The car corps got bailed out by tax dollars and now by mother nature. Still their greed and horrible engineering results in paying double for a hunk of junk that does not last for the entire finance average of a five year note. Smells like the car companies are sleeping with Geithner and Bernenkie, and the rest of the fed/wally world. In cahoots with big oil too...a car that burns lots of this stuff is ugly huge dollars to the oylrapists. The unions have been busted to patsys for labor laws already on the books. The simple fact that workers feel like they have to protect themselves from employers should speak mountains of words on how crappy and aloof the corporate world is. These mindless beasts have not long to live. The greed dragon is eating its own tail. The world would be a wonderful place without them. Hunt them down and kill the snakes in their lairs, just like OBL. Seal bark and flipper clap.

[rockcutr]

All insensitivities aside, as the business world looks to profit from the devistation in Japan. Bailing out an auto company under any disaster is well, simply put, stupid. Much of our problems in America are due to the market saturation of foreign products. NAFDA was a firestorm of an idea which has killed a stable economy. Once again the corporate dragons are flying low with scorched earth on their minds. There is a solution. If those foreign companies wish to build their cars in America, they should then become citizens. Pay the taxes just like American builders have to pay. These products must remain cheaper to the American buying public and not allow foreign entities to reap huge profits from a weak, wobbly knee, economic system here at home in order to pacify these corporate raiders.

[tsigili]

NO WAY!

Just buy American.

[skeezix06]

I've been considering buying a prius for a couple of months. However, my current hybrid is probably good for at least another 50,000 miles and if they raise the price, I'll forget the prius.

[JtJt12944]

I feel this article was insensitive to post at this time.