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How Japan's Earthquake Affects New Car Buyers

by Brian Wong (Jul 26, 2011)

While Japan continues to recover from the earthquake and subsequent tsunami that rocked the country on March 11, it looks like there will also be a lasting effect on the new car industry that will impact U.S. car buyers.

As Japan rebuilds, the damage the country suffered to its roads and power plants have made it difficult for carmakers to resume production. Many suppliers of auto parts and steel were based in the northern part of Japan that was hardest hit and ripples from this disaster are being felt up and down the industry.

Toyota and Honda, the two largest Japanese carmakers in the U.S., announced that they will be delaying production at their Japanese factories back to March 26 at the earliest over parts supply issues. Overall, the Japanese auto industry has lost an estimated 338,000 units due to production stoppages since the quake.

U.S. carmakers who depend on Japanese components for their cars could be feeling the squeeze as well. G.M. has already temporarily idled a plant that produces its Colorado and Canyon pick-up trucks and another plant that produces the engines for those trucks due to shortages.

So what effect will this have on new car buyers? A dip in supply on car models manufactured in Japan combined with a rise in new car demand means that it will be harder to get a good deal on new cars, as dealers are less likely to offer incentives and can even charge more for those cars.

As far as the supply of new cars from Japan goes, there is a solid supply of most cars on dealer lots and shortages probably won't be felt for the next few weeks except for those models which sell very quickly. Even then, supply shortages shouldn't reach panic levels. So if you were looking to buy one of these cars, it might be prudent to ride out the storm a little while longer until supplies stabilize.

One particular model bears mention and that is the Toyota Prius. The Prius, made exclusively in Japan, is already a vehicle with lower supply since people have been buying them at higher rates thanks to the rise in gas prices. Cars.com's national inventory numbers for the Prius were already very low and since the disaster people have been racing to buy them even faster which is adding to the supply woes for the world's most popular hybrid.

Here's a quick rundown of how the events in Japan are affecting the major carmakers based there:

Toyota
Toyota has halted production at all of its Japanese plants until March 26 which will affect models like the Prius and Yaris. Additionally, all Lexus and Scion cars are assembled in Japan so the supply for those brands will be adversely affected.

Honda
Honda's plants will re-open no earlier than March 27, and they have also suspended orders for Japan-built automobiles including the Fit, Insight hybrid, and Civic Hybrid. The Acura TSX and RL are also assembled in Japan and orders for those cars have been suspended as well.

Nissan
Nissan will be the first carmaker to resume production this week, of both parts and automobiles. However disruptions from rolling blackouts and parts delays means they will not be running at full capacity. 1,300 Infiniti cars, Nissan's luxury brand, which were ready for shipping and at port were lost in the tsunami. But a shipment of 600 Nissan Leafs, the company's all electric car, luckily did make it out the day before the quake hit.

Mazda
Mazda is set to temporarily resume production of replacement parts so that vehicles currently in process at overseas plants and plants in Japan can be completed.

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