Car Prices Quietly Spike As Japanese Model Shortages Grow

Car prices have risen quickly and quietly in the last few weeks, and it's not just due to increases announced by auto manufacturers to offset higher material costs. According to auto industry research firm Edmunds, the average amount that buyers are paying for cars or light trucks is up $350 since Japan's earthquake and tsunami in March. The data is based on prices paid in the first week in May.

Japanese car prices have gone up even more than the average. Honda (HMC) Accords are up $480 since the last week in April, and the prices of the Honda CRV, Toyota (TM) Corolla, and Camry are also much higher. Ironically, these price hikes are coming at a moment when Japanese car companies are bleeding market share. Edmunds reports that since the first week in April, Toyota's retail market share is down 28% and Honda's is down 20%. Meanwhile, GM's (GM) sales have surged 28%.

Most car companies drop their prices when they need to bolster their sales. But for the moment, the Japanese car companies don't have and can't produce enough vehicles to keep their previous share of the American market. Toyota recently said its Japan production will not be fully restored before the end of the year. Perhaps the Japanese automakers are taking the risky route of raising prices to make up for lack of increases in inventory.

The danger for U.S. consumers is that American and European manufacturers may also raise prices. Normally, they would be looking for ways to cut them to take sales from the Japanese, but the post-quake inventory problem has made that unnecessary. With Japanese models are unavailable, buyers who might have preferred them will turn to other brands, even without the incentive of better prices.

Still, the May numbers from Edmunds may not be entirely positive for Detroit and Europe. A general price increase on vehicles may cause a buyer's strike in the U.S. as Americans elect to keep their current vehicles for a bit longer, and wait to see if prices drop again.



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TTCars

Passenger car makers offered huge discounts in December, as much as Rs 60,000-70,000, to attract buyers, in what has been a year full of speed breakers for the industry. But if you haven't bought your car yet, get ready for price hikes from January.

Many car makers out there, Indian and multi-national, have announced price hikes in the range 1-3 per cent from January 1.

December is typically a month, where passenger car companies offer discounts to clear out the excess inventory with them and their dealers, before new year models are launched from January.

Latest Car News Review With Car Prices at http://www.ttcars.net/blog/

January 01 2012 at 5:43 AM Report abuse rate up rate down Reply
dl0007

Toyota and Honda are taking advantage of the Eartquake to raise car prices. Yes, the earthquake has been devastating to Japan. However most Toyota's and Honda's sold in the United States are manufactured here. Bend over and grab your ankles because Americans are getting it put to them again!

May 22 2011 at 4:14 PM Report abuse rate up rate down Reply
Big Bad John

The recent things that has happen to the people in Japan is terrible. I feel very sorry for them but its time for the American people to start buying American made vehicles again.The American made vehicles today are 10 times better than what was made 10-15 years ago. The cars that are put together by foreign owned automobile manufacturers are not as good as the American made vehicles today Look at all the recalls that these manufacturers from Japan has had and with all the problems going on now in Japan they will not improve anytime soon, I think right now the vehicles made in the U.S. by U.S. manufactures that DO NOT USE ANY PARTS made in Japan are the best made plus it will help our economy.

May 19 2011 at 5:18 PM Report abuse rate up rate down Reply
1 reply to Big Bad John's comment
psdaengr

Great idea, if you could find a car with no alternators, radio, GPS, ECM, head or tail lamps. Japan is one of the largest sources of these parts - though they often outsource the manufacturing/assembly to Japan or Korea.

AFA QC goes, the "big three" are international operations with models produced in Canada, Mexico and Australia. The best of the American cars are on a par with comparable foreign models, but they have a very high percentage of foreign made components. Where American operations have improved the most is in fit and finish of the bodies and interiors, not the electro-mechanical components.

May 20 2011 at 2:20 PM Report abuse rate up rate down Reply
CHAGET1

WHERE ARE MY POGO 50000000 POINTS?

May 18 2011 at 4:06 PM Report abuse rate up rate down Reply
Big John

Have you not learned how this game is played yet? Just wait!!!

May 17 2011 at 1:52 PM Report abuse +1 rate up rate down Reply
daveswrath0704

seen like greed to me cant make cars so we just raise the price we make a profit one way or other and then we will flood the market with are junk cars again and HIDE all are recall veh again will so glad us so dumb for sending a there money for are junks!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

May 17 2011 at 1:44 PM Report abuse rate up rate down Reply
renaldo1949

i think it ironic that some who like to talk about the free market should have let gm and chrysler fail now complain about free market forces that drive prices up when there is a shortage.

May 17 2011 at 8:35 AM Report abuse rate up rate down Reply
kalelreg

Keep driving your current cars. It's cheaper to repair them than to buy new ones and you save on insurance and
property tax too. Plus it really keeps Americans working repairing the cars. Most of the after market car parts are made
in this country, even for the foreign cars. Also, most independent repair shops are like most of us, non-union and the
mechanics really do work, not just figure out how not to do work like most union workers.

May 17 2011 at 4:54 AM Report abuse -1 rate up rate down Reply
elkhartbiker

If the shortage of Japanese autos can't help GM and Chrysler, then these Obama-owned companies are truly doomed. Personally, I'd never buy a car from either of these companies since they took the taxpayers to the cleaners instead of socking it to the over-paid, under-worked spoiled UAW thugs.

May 16 2011 at 11:22 PM Report abuse -3 rate up rate down Reply
2 replies to elkhartbiker's comment
crazy ray

Isn't that like committing suicide to spite someone else? Send your money overseas. I'm sure this will really make more jobs for you kids and grandkids in the long run. You Quislings are enough to turn the stomach of anyone who understands what freedom is all about.

May 17 2011 at 3:58 AM Report abuse -1 rate up rate down Reply
Big John

But it is ok to bail out the big banks and wall street? I don't think the majority of people in this country have a clue how close Bush brought us to a total meltdown. Please do a little homework and find out how bad that would have been for our country and for you personally.

May 17 2011 at 1:56 PM Report abuse +1 rate up rate down Reply
rossandsheila

Here we go again. Sock it to the consumers.Gotta get more money!I wish someone would do a study of what a car like the Chevy Malibu actually costs to produce vs what it sells for in a dealers lot.A breakdown of the entire car components,labor costs marketing costs,and profit .Then show the actual dealers costs and profits.I have seem some partial analysis over the years, but never a good article on this subject.The auto industry always gives inflated numbers saying that their margins are really thin and their competitors enjoy unfair advantages.

May 16 2011 at 10:25 PM Report abuse +5 rate up rate down Reply