Edmunds.com Answers Readers' Questions about Japanese Disaster's Affect on Auto Industry

Edmunds.com Answers Readers' Questions about Japanese Disaster's Affect on Auto Industry


Edmunds.com Answers Readers' Questions about Japanese Disaster's Affect on Auto Industry

SANTA MONICA, Calif. — March 18, 2011 — In the aftermath of the devastation wrought by the earthquake and tsunami in Japan, U.S. car buyers have questions about the effect this catastrophe will have on the new cars they're interested in buying. Edmunds.com, the premier online resource for automotive information, has published questions and answers at http://www.edmunds.com/car-buying/the-japanese-earthquakes-effects-on-car-buying.html. Here are some highlights:

Q: With all that's going on in Japan and the rest of the auto industry, should a car shopper buy now or buy later?
A: "If you had any intention of buying a vehicle in the next few months, there is no downside to buying now — and plenty of possible upside," says Edmunds CEO Jeremy Anwyl in a commentary at http://www.autoobserver.com/2011/03/now-a-good-time-to-buy.html. "It seems safe to say that prices aren't going down, and supply isn't going up."

Q: Did prices for Japanese cars immediately go up after the earthquake and tsunami?
A: No, an Edmunds.com analysis of actual transaction prices paid for popular vehicles that are built in Japan and imported to the U.S. shows no change in prices that consumers have paid since the disaster hit on March 11. For more on this, see the AutoObserver.com report at http://www.autoobserver.com/2011/03/no-price-hikes----yet.html.

That being said, car shoppers should be alert to on-the-lot markups that dealers might attribute to the situation in Japan. The best way to avoid opportunistic price hikes is to check True Market Value® (TMV®) for the cars you're interested in and obtain quotes from several dealers' Internet departments.

Q: Going forward, will the prices of cars built in Japan be affected by this disaster?
Edmunds Chief Economist Lacey Plache notes that current incentive programs are in place through the end of March, so it is unlikely that any price increases due to lowered incentives will show up before then. In the longer term, pricing for Japanese-built cars could be affected for many reasons, including increased production costs and the possibility that Japanese automakers may have a diminished ability to offer incentives due to costs of reconstruction in Japan.

Q: Will prices increase on cars built outside of Japan?
A: For Japanese-brand cars that are built in the U.S., short-term price increases are unlikely, but longer-term effects are possible, Plache says. If Japanese automakers lower or don't increase incentives on their vehicles, non-Japanese automakers may lower their own incentives because the competitive pressure is reduced.

Q: What's the situation with the hybrid supply?
A: All Japanese-brand hybrid models are built in Japan, as are several fuel-efficient vehicles that were popular in the gas shock of 2008 the Honda Fit and Toyota Yaris. With increased demand, there could be constraints on availability and options. 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. Toyota's latest update reveals that inventory levels for the Prius are adequate, and only one of the three plants that produce hybrid batteries was affected by the earthquake.

Q: Will car deliveries be delayed?
A: There are several operational ports that are currently shipping vehicles from Japan. If Japanese plants continue to receive parts and supplies and the highway systems in Japan can allow for delivery of vehicles and supplies, there is no indication that shipments will be delayed. However, if production is slowed for any particular model, there could be delays in availability.

Q: Will the earthquake in Japan affect production for non-Japanese automakers?
A: It's possible, says Plache. There are many models on sale today that use components produced in Japan. For example, the transmission in the Chevy Volt comes from Japanese suppliers, and Japan is BMW's source for semiconductors. Even if just one component is unavailable, it can delay the production of a vehicle.

Q: I have a Japanese-built car on order. How will I know if its production is being delayed?
A: Stay in touch with the dealership that's selling you the car. They should have current information on any delays in production for particular models.

Q: I'm shopping for a car right now. Do I have any extra leverage during a sales negotiation?
A: If you are a serious buyer, let the salesperson know that you're not afraid to walk away if you don't get the right price on a car you want. He'll either make you a better offer on the vehicles he does have or suggest a comparable vehicle. Just make sure you check the TMV® of the vehicle and get offers from other dealers.

About Edmunds.com, Inc. (http://www.edmunds.com/help/about/index.html)

Edmunds.com Inc. publishes Web sites that empower, engage and educate automotive consumers, enthusiasts and insiders. Edmunds.com, the premier online resource for automotive information, launched in 1995 as the first automotive information Web site and hosts the most established automotive community online. Its mobile site, accessible from any smartphone at www.edmunds.com, makes car pricing and other research tools available for car shoppers at dealerships and otherwise on the go. InsideLine.com is the most-read automotive enthusiast Web site. Its mobile site, accessible from any smartphone at www.insideline.com, features the wireless Web's highest quality car photos and videos. AutoObserver.com provides insightful automotive industry commentary and analysis. Edmunds.com Inc. is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit. Follow Edmunds.com on Twitter@edmunds and fan Edmunds.com on Facebook at http://www.facebook.com/edmunds.

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