As Japan's automakers restart production, the future of car prices looks very uncertain
Friday 01 April 2011
Some of Japan's major automakers are set to resume production this month, as they struggle with the ongoing effects of the devastating earthquake which hit the country in March.
Honda said March 30 that it will begin producing vehicles at half its normal rate in Japanese plants from April 11, adding that parts production will begin April 4, according to Automotive News.
Mazda also said that it will resume "limited production" April 4 and Nissan hopes to reach "normal" production by the middle of the month, but Toyota, Japan's largest automaker, will keep most of its plants closed until at least April 14.
For several automakers, the primary problem with resuming production is the shortage of parts, made worse by the delicately-balanced nature of Japan's 'just-in-time' automotive industry.
It has also left the car plants around the world which are reliant on parts from Japan running at reduced capacity, with a knock-on effect to the supply of vehicles that experts warn will push up prices, although there's some debate how long it will take, and how serious it will prove.
Earlier this week, one analyst predicted that the disaster could cut global car production this year by up to 20 million vehicles - perhaps a pessimistic view, but one which is likely to contribute to the overall fear about the supply of some of Japan's most popular cars, such as the Toyota Prius hybrid.
US price analyst TrueCar.com said last week that prices for models such as the Prius, Honda CRZ and Insight Hybrids were beginning to rise, predicting that the Prius, which carried a $700 discount this month, will sell at an $800 premium by the end of April.
"Almost all vehicles that have had a loss in production will have an increase in transaction price," said TrueCar.com's Jesse Toprak.
"The vehicles that will have a more significant increase will be hybrids and the more fuel-efficient vehicles."
Analysts believe that it's likely to be some time before the true effects of the disaster are felt as reserve stocks are used up, with predictions ranging from a few weeks until well into the summer.
But with second-hand car prices following the trend of new car prices, it seems that it could be some time before car buyers again see the discounts to which they've become accustomed.
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