subject: MI Car Dealers Be Warned: Prices Rising on all Types of Vehicles; New, Used, Fuel-Efficient [print this page] MI Car Dealers Be Warned: Prices Rising on all Types of Vehicles; New, Used, Fuel-Efficient
DETROIT, M.I. MI car dealers may have already started preparing for the worst while the industry was being analyzed in March and the future started to look like a series of increasing prices and vehicle shortages were on the way. With the crisis in Japan far from over, there are still many parts that are not being manufactured, which in turn, is stopping the production of many sought after vehicles.
Shortages
After the Japan earthquake and tsunami, automaker plants all across Japan and the U.S. shut down; some for a day while others were closed for weeks. There were many speculations about when the effects would fully be felt by the industry, and it seems the time has arrived.
Toyota Motor Corp. may be the first automaker to warn its dealers in the U.S. about the possibility of large shortages of new vehicles for the summer. In a memo sent to U.S. dealers, Bob Carter, head of the company's Toyota brand in the U.S., wrote:
"What we don't know are vehicle production levels for May through July. The potential exists that supply of new vehicles could be significantly impacted this summer."
No further details were added by Toyota Spokesman Mike Goss as he said, "It's still too early for us to say precisely. We just don't know yet the full picture."
This shortage issue will more than likely affect other Japanese automakers like Nissan and Honda.
Already MI car dealers as well as dealers across the country are feeling the squeeze of short supplies of certain vehicles. Vehicles such as the Toyota Prius are one of the most sought after vehicles due to rise in fuel prices. The fuel efficiency is almost unmatched, but unfortunately most Toyota dealerships have no Toyota Prius models available. Some dealers who are able to find a Toyota Prius will pay much more than usual and will not make a profit.
Also detailed in the memo from Toyota, Carter stated that Toyota has 300,000 vehicles available in the U.S. Considering that the company sold 176,222 vehicles in the U.S. in March, this shows less than two months of Toyota vehicles available.
Increases
Already MI car dealers have seen increases in prices as Ford recently raised its prices on its different models. Although Ford was not the first automaker to raise its prices, it may be possible other automakers will soon follow suit.
[Rewind: MI Ford Dealers Face Higher Prices on Vehicles as Ford Adds $117 per Vehicle to Consumer Cost]
In March, Toyota was the first automaker to raise its prices. The increase will be anywhere between 1.2 percent and 2.2 percent on Toyota's different models. This translates into increases in prices anywhere between $200 and $900. Toyota and Lexus models will see the most increases while Scion will stay relatively the same.
The following is a list of some of Toyota's more popular vehicles with their price increase:
Model: new price (old price)
Camry: $20,195 ($19,820)
Corolla: $15,900 ($15,600)
Lexus LS: $67,130 ($66,230)
Lexus RX: $39,075 ($38,375)
Scion xD: $15,110 ($15,045)
Other prices that are beginning to increase include prices for used cars. The problem may be that the prices of used cars are starting to meet new car prices with incentives and financing as they increase, so soon it may not matter what kind of car a consumer purchases; the cost will be the same.
As fuel-efficient cars become scarce, the prices of the ones remaining for purchase will also increase. Vehicles such as the Honda Fit, Mazda MAZDA3, Toyota Yaris, Honda Insight and the Nissan Leaf are all almost completely manufactured in Japan. The Honda Fit has already seen an increase of 0.1 percent or $21; although this price may not be significant now, the price could continue to increase as the demand increases for inventory that is not available.
Shutdowns
During the first couple of weeks after the Japan disaster, manufacturing plants were shut down all over the country in the U.S. as well as other countries. Most plants came back online, but automakers like Toyota are still facing shutdowns.
Toyota announced that it will suspend production of its North American plants in a series of one-day shutdowns this month as a result of parts shortages, according to MSNBC.com. There will be no layoffs according to Toyota although the temporary closures will affect 25,000 workers. The shutdowns will begin April 15 with production halted for a total of five days: April 15, 18, 21, 22 and 25. Only one plant in Georgetown, Ky., will be only halted for four days.
The effects of the Japan disaster could increase to higher levels than what is being seen at this point, but only time will show what the real effects will be. MI car dealers will likely see higher prices across numerous brands. Check back as MI Auto times keeps readers updated on the auto industry as it changes.
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