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Japan disaster cuts supplies, increases prices, especially on small cars

Consumer Reports News: March 25, 2011 01:49 PM

Our thoughts go out to people of Japan in this time of grief and crisis. And in a small way, we are studying what this tragedy means to us here in the United States.

No one knows for sure when car factories may start running again in Japan. But in the meantime, the tragic earthquake and nuclear crisis has shut down production of some especially high-mileage cars just when gas prices are spiking.

“Small, fuel-efficient vehicles have been hit by the perfect storm,” says Jesse Toprak, vice president of industry trends with “Gas prices are up, national demand is up, and production constrained.”

Those constraints are beginning to show up in higher prices for popular Japanese fuel misers, especially the Honda Fit and the Toyota Prius. According to data, prices for the Prius rose from about $300 under invoice two weeks ago to selling for sticker price this week. That’s more than a 10-percent swing for a $22,000 car. Likewise, Honda Fit transaction prices have already increased, and Toprak projects the figures will climb several hundred dollars in the coming weeks.

Toyota has announced that it restarted limited production yesterday at the Prius factory using parts supplies on hand, despite damage to a factory that builds its hybrid batteries. Meanwhile, Toyota told employees and dealers in a letter that parts shortages from Japan were likely to begin affecting some of its factories in North America. It has yet to shut down any North American factories.

Honda looks like the automaker that has been hardest-hit, suspending new dealer orders for the CR-Z, Fit, Insight, and Acura RL and TSX, as well as some CR-Vs that were made in Japan. The company has said it hopes to reopen factories in a week, but admits that some suppliers have indicated they’re not sure they can get their factories reopened in that time frame.

Although small Japanese cars are the hardest hit, they aren’t the only ones. Even cars produced in North America aren’t immune. General Motors had to shut down a plant that makes small pickups in Louisiana, reportedly because of a shortage of Japan-sourced parts. Components come from all over the world today, and a supply chain disruption can impact plants in different countries.

Almost every Japanese model examined by showed an increased transaction price compared with before the earthquake. Even buyers of the giant Toyota Land Cruiser, which is built only in Japan, found themselves paying $3,000 more for the behemoths than they did a few weeks ago.

So far, more than 200,000 Japanese cars that were scheduled for production haven’t been made, leaving short supplies on dealers’ lots. And car shoppers will face diminishing choices of options and colors on these cars in coming weeks.

The situation in Japan has interrupted or slowed production of the following models:

Toyota Prius and Land Cruiser, Lexus HS 250h and CT 200h
Honda CR-Z, Fit, Insight, and some CR-Vs made in Japan
Infiniti M35 (hundreds bound for the U.S. were damaged in port)
Subaru Forester, Impreza, Outback Sport, WRX, and STi
Suzuki Kizashi, Grand Vitara, SX4 Crossover

North American-built cars with both Japanese and American nameplates could also be affected by shortages of parts including computer chips, batteries, LCD monitors, and other parts made in Japan. Subaru and Toyota have eliminated overtime at all their U.S. plants to preserve their parts inventories. Also affected include:

Chevrolet Colorado and GMC Canyon pickup trucks
• All North American-built Toyotas
Subaru Outback and Tribeca

According to Automotive News, it could soon affect U.S.-made Nissans, as well. The company said it is uncertain it can maintain full production at its four North American factories after April 1, and it may begin exporting U.S.-made V6 engines back to Japan to compensate for the loss of production there.

So consumers looking for a Japanese car, and especially a small economy car, might consider acting quickly. A better strategy if you can put off buying a new car would be to wait until production--and prices--get back to normal.

Eric Evarts

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