A distant catastrophe hits home for car buyers
Dealers brace for shortages of Japanese makes
Plan to buy a new
Local auto dealers say they are bracing for a shortage of Japanese-made vehicles and components in coming months as Japan recovers from a deadly March earthquake and tsunami that severely disrupted automobile production there. The island nation is the world’s second-largest supplier of cars and car parts.
While dealers have plenty of cars on the lots, the shortages could hit here as soon as May and last at least a few months, according to analysts and dealers. Cars made exclusively in Japan, such as Toyota’s Prius, Honda’s Fit, and Nissan’s Rogue, will probably be the first in short supply. Other models will follow as parts shortages curtail production at North America plants that supply the US market.
As a result, car buyers can expect to pay $200 to $2,000 more for Japanese cars this summer as inventories run low and manufacturers cut incentives offered to dealers to take more cars, according to TrueCar, Inc. a California firm that tracks new car prices. Those incentives are usually passed along to buyers.
“Toyota and Honda are going to be very short on cars this summer,’’ said Ernie Boch Jr., who sells both brands through Boch Automotive in Norwood and is also a distributor for Subaru. “It’s probably going to be the worst drought in years. Some models are going to be difficult to get. Inventory in general is going to be difficult to get. Parts are going to be difficult to get.’’
And the shortages will not be limited to Japanese cars, since Japan supplies components to automakers around the world — including engines, tires, and paint pigments. Some US manufacturers are already feeling the pinch: Last month, General Motors shuttered its Shreveport, La., assembly plant for a week because of a parts shortage.
Ray Ciccolo, who sells General Motor’s Cadillacs through the Village Automotive Group in Boston, said he already sees GM cutting back on incentives for selling the luxury cars.
“Ironically, Cadillac is going to be affected [because] some part that goes into Cadillac is made in Japan,’’ said Ciccolo, who also sells Hondas and Nissans. “The word is that all product is going to be affected.’’
The March 11 earthquake and tsunami — and nuclear disaster that followed — have forced Japan’s automotive plants to close or limit production, with many only recently beginning to resume operations. Japanese cars account for 39 percent of the US auto market, according to Edmunds.com, which tracks the auto industry for consumers.
Some Japanese manufacturers are also cutting production at US operations, which depend on supplies from Japan for certain car models. Toyota last week said it would suspend production at most of its North American plants for several days this month, with shutdowns planned Monday, Thursday, and Friday.
“We are slowing down to conserve parts yet maintain production as much as possible,’’ Steve St. Angelo, executive vice president of Toyota Motor Engineering and Manufacturing in North America, said in a statement. The car maker said yesterday that its Japanese plants will continue to produce at half their normal volume until at least early June.
Gary Jaffarian, a third-generation car dealer who sells Toyotas, Scions, and Volvos at Jaffarian Automotive Group in Haverhill, said he expects any shortages to hit by June and last no more than a few months. He is already fielding questions from customers worried about being able to buy a new car or service older ones.
“We’ll find a way to get a car for you; we’ll find a way to fix your car,’’ he assures them.
One customer, Stephen Buscema of Haverhill, said he isn’t concerned about a parts shortage, but is thinking about what work his wife’s 2005 Lexus RX 330 might need in the near future.
“What’s coming up as far as major service? Do I need to buy an air filter?’’ he said. “If there’s something that the engine absolutely needs, I might be prone to go looking for it.’’
Kevin Lawrence, Jaffarian’s wholesale parts manager, said one way Toyota is managing possible shortages is by only sending parts that might be in short supply if they are needed for immediate repairs. To get a part, dealers must send in a form with the Vehicle Identification Number of the car getting fixed.
“They want to make sure,’’ Lawrence explained, “that people aren’t just putting this stuff on the shelf to have it on the shelf.’’
Part of the problem, analysts said, is the auto industry’s use of a “just-in-time’’ inventory management system, which replenishes supplies to dealers just as they run out. When that system is disrupted, there are no significant stockpiles to fall back on.
“It has a huge trickle-down effect,’’ said analyst Phil Magney, automotive vice president for IHS iSuppli, which researches distribution networks. “At the end of the day, if that raw material or that raw component that comes out of Japan is out of stock, everybody in the supply chain is affected.’’
To maintain as much inventory as possible, Boch and Ciccolo said, they will promptly report every car sold and urge other dealers to do the same, because regional sales help manufacturers determine where to send more cars. But if inventory dwindles, dealers said, it will force customers to compromise on what they want in a new car or delay the purchase.
To prepare for the months ahead, Ciccolo said, he plans to take every car offered by an automaker. In the past, he explained, he might have quibbled over things like model or color.
“Now, there’s no negotiation,’’ Ciccolo said. “Send me every car you can.’’
Erin Ailworth can be reached at email@example.com.