Earthquake, Gas Prices Could Set Back New Car Sales

New car buyers may go on strike -- again. Faced with the rising cost of fuel and parts shortages that could drive up new car prices and make some popular models scarce, consumers in the market for a new car may decide to delay purchases or turn to used cars. That would push auto manufacturers back into a difficult position.

Car trend research firm Polk noted last fall that the average new car owner kept a new model for 63.9 months -- up 4.5 months from the same time a year earlier. Several factors played into this trend, including consumer austerity driven by the recession, the prevalence of longer-term car loans, and better-made cars.

Many of Japan's auto parts plants are still shuttered after the March 11 earthquake. Most of the manufacturers that source parts from Japan say they will slow or shutter some production facilities. That should have two effects. The first is that some of the models for which there is most demand, like the Toyota (TM) Prius, will become available at fewer and fewer dealers. Normally, that would drive up prices. Alternatively, buyers may wait until the shortage is over. In this scenario, car companies would be faced with a decline in sales just when they expected to be able to raise prices.

The National Automobile Dealers Association (NADA) says that the hike in gas prices has pushed people to buy used cars. That trend could gain momentum if there are fewer new models to choose from. Jonathan Banks, an analyst for the organization, said that both a slowdown in manufacturing and high fuel prices has caused consumers to shop used versions of cars like the Prius. He sees a potential increase in this activity as parts shortages grow.

If consumers again delay the purchase of new cars, this could put auto manufacturers through another challenging period like the one they went through in 2008 and early 2009. U.S. sales of cars and light trucks hit over 16 million in 2006. By 2009, however, that figure had dropped below 10 million. Car manufacturers expect American sales to run over 12 million units this year. Manufacturers have cut their overall labor costs and factory production enough so that at the 12-million-unit level most should make money. But 12 million may be a stretch if high gas prices and parts shortages become long-term problems for consumers.

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josh

Anyone buying a new car should read this recent post:

http://www.arlington-toyota-beware.com/

March 29 2011 at 3:36 PM Report abuse rate up rate down Reply
hjdir

http://www.wowougg.com


it have shoes ,tshirts,jewerly,caps,belt,
woman boot,handbags and so on
all famous brand you like but cheap

March 24 2011 at 10:09 PM Report abuse -1 rate up rate down Reply
bam2microa

FYI: Now is the time for your voice to be heard. Demand that the CFTC implement tough new rules to put an end to excessive commodities speculation. Send an e-mail to the CFTC by March 28, urging it to adopt speculative position limits that protect American consumers and our economy from the volatility and high prices that excessive speculation causes. Tell the CFTC that efficient, rational commodity markets need effective position limits, transparency and a regulator that guards against market distortions caused by excessive speculation, as well as fraud and market manipulation. Please go to www.stopoilspeculationnow.com and make your voice heard or be part of the herded.

March 24 2011 at 6:18 PM Report abuse +2 rate up rate down Reply
bam2microa

Please go to www.stopoilspeculationnow.com and send a message to the Chairman of the CFTC to help stop this transfer of wealth. They need to enact the legislation that has already been passed now.

March 24 2011 at 6:04 PM Report abuse +2 rate up rate down Reply
STAN

With a record level of crude now in storage, and the cost of gasoline still headed upward, I have curtailed most of my driving. I live withing walking distance of everything I need, and I hope the oil companies choke on all their excess crude and gas. Just any old excuse to keep the prices high? To that I say BS!!! Libya doesn't even sell their oil in the US, and produce less that 2% of the world's oil. Why would that affect us here in the US.

March 24 2011 at 3:25 PM Report abuse +1 rate up rate down Reply
3 replies to STAN's comment
inasctg56

reply to donnareed4: You're right about cars not being 100% american anymore, but Toyota advertises how american they are. And after 911 it was our US auto industry who sent vehicles, supplies, and money. The transplants - zero- they took their record profits home. Not easy to compete with transplants when they were given a combined total of over $80 billion in tax dollars from mostly southern states and land. This is why the southern gop screamed to let our US auto industry to go under - they had everything to gain. And why they looked they other way when it came to Toyota fatalities and recalls under Bush. Not right.

March 24 2011 at 3:16 PM Report abuse -2 rate up rate down Reply
inasctg56

US auto workers make less than Toyota and with the new two tier wage agreements, new hires make half. Our manufacturing sector has seen 19 months of gains as well as our exports. As these paychecks return to our communities and businesses it creates demand for goods and services which creates more jobs, our tax base returns, the natl debt can be addressed more aggressivley, and the value of our dollar increases. Also 100% writeoffs for improvements made in THIS country will help as well as the new trade agreements with China, South Korea, and South America. For every 10% gain in exports equals a 7% gain in jobs.

March 24 2011 at 3:10 PM Report abuse -2 rate up rate down Reply
bhill72747

People who continue to buy overpriced new cars must have too much money. In order for cars to be back in the "real world" they need to cut prices in half. If that means less styling and fewer gadgets so be it! Maybe they should consider building them in Texas or some other "right to work" state where the workers don't make $70 per hour in pay and benefits and the executives don't make millions per year.

March 24 2011 at 3:01 PM Report abuse +4 rate up rate down Reply
2 replies to bhill72747's comment
donnareed4

bh , I agree with you but unfortunely here in Indiana our democraps ran to urbana, Ill to avoid voting for this. As they did in Wisconsin. Our democraps have been out of work for over 4 weeks! Now that has to be a the biggest scam I ever heard of. You don't like a vote run away and hide! We seem to speculators who run the oil prices to what ever they want. democraps who run whatever they want. and people wonder why comapanies go overseas..geeeeeeeeeeeee duhhhhhhhhhhhhh?

March 24 2011 at 3:44 PM Report abuse +6 rate up rate down Reply
STAN

Donna, I'll give you an AMEN to that!

March 24 2011 at 9:35 PM Report abuse rate up rate down Reply
danielisticall

TEST

March 24 2011 at 1:30 PM Report abuse rate up rate down Reply
pozboys

If this dose not show what can happen by building everything overseas,then what will? It only takes some natural disaster or glitch in the pipeline to throw it all out of kilter! We allowed big business to off shore all our manufacturing ,now, this is just a preview of what could happen, all be it, on a small scale,but it should be a warning of what will happen,say, if China wants to "punish us" in some way! Just saying!!

March 24 2011 at 12:39 PM Report abuse +1 rate up rate down Reply