Automakers Scramble in the Wake of Japanese Disasters

Last Updated Mar 25, 2011 9:37 AM EDT

As Japan struggles to deal with the human toll of the earthquake and tsunami, Japanese and U.S. auto companies are scrambling to determine how severe the disruption to their business will be. In addition to the obvious challenges facing Japanese factories, many American-made vehicles are affected because they use some Japanese parts. As a consumer, you can expect to see production delays, tight supply and higher prices.

Here's the latest news, and strategies for you if you're considering one of these cars:

• Cars built in Japan are feeling the most immediate effect. Rising gas prices combined with fears of short supplies of the Toyota Prius have sent prices soaring for the high-mileage hybrid. Honda, meanwhile, has told U.S. dealers it will delay taking orders for May delivery of cars built in Japan. That includes the high-mileage Honda Fit (right) as well as the Civic and Insight hybrids.

• U.S. companies whose models use Japanese parts have felt some impact too, and the situation will worsen if supply disruptions lengthen. General Motors (GM), for instance, is suspending production this week at a Louisiana pickup plant as supplies of Japanese-made parts dwindle. High-mileage U.S. cars including the Ford Fusion Hybrid and Chevrolet Volt, which get crucial parts from Japan, could feel the pinch after two months or so, analysts say.

• Used car prices for high-mileage models are surging, partly in response to potential new-car shortages. "We're seeing price increases of 2% to 4% on subcompacts and other fuel-efficient cars at auctions as dealers stock up on these models," says Juan Flores, director of vehicle valuation for Kelley Blue Book.
The supply disruptions from Japan hit just as the conflict in Libya was driving up oil prices, and gas prices are averaging above $3.50 a gallon nationwide and near $4 in California. In response to that run-up, automotive web site Edmunds.com has seen a 30% increase in interest in the Toyota Prius since the beginning of the year. Now Prius prices are spiking as well. Though no national average price is available yet, Linda Goldberg of car-buying service CarQ says that since the earthquake she has seen prices climb about $1,500, based on prices that dealers are offering her clients. In some cases, she says, the selling prices have been above list price.

If gas prices have you shopping for a higher-mileage car, take a deep breath and consider these possibilities:

Look for U.S. made cars with promotions. Though prices are already rising for the Japan-built Honda Civic Hybrid, consider the regular Civic, built in this country, which has a mileage rating of 26 mpg city, 34 highway. Honda is still offering dealers a $1,000 promotional incentive on this car. For instance, you could get a Civic DX-VP sedan for about $16,150. If you qualify, Honda is offering 0.9% financing on loans ranging from two to five years. Or, if you prefer to lease, a three-year contract carries payments of a little less than $200 a month.

Don't over pay for a used car. There are lots of good reasons to buy lightly used cars -- namely that someone else paid for that big first-year depreciation. But used-car prices have already risen over the last year or so. For instance, even though the Prius is a reliable used car, check online sites for average selling prices to make sure you are not overpaying.
Consider just waiting. Sure, if you need a vehicle immediately, you may have no choice but to buy now. But if gas prices are pushing you to trade for higher mileage, you may have buyer's remorse within a year. Kelley Blue Book analysts suggested consumers recall a similar move toward high-mileage models in 2008 when gas prices last hit $4, then later fell sharply as the economy contracted. "I filled up today and it cost $72," says Kelley analyst Juan Flores, who is based in California. "That hurt. But I reminded myself it was only $10 more than I paid six months ago." If you can handle the current fill-up cost, he adds, don't let frustration cause you to rush you into a decision involving thousands of dollars. Making a financial decision on the basis of the latest crisis is almost always a bad idea.

Photos courtesy of the manufacturers

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    Jerry Edgerton, author of Car Shopping Made Easy, has been covering the car beat since Detroit companies dominated the U.S. market. The former car columnist for Money magazine and Washington correspondent for Business Week, Edgerton specializes in finding the best deals on wheels and offering advice on making your car last.

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