Parts shortage will boost new car prices

Your new car is about to get more expensive, if you can buy it at all. Just as chaos theory suggests a butterfly’s fluttering wings may affect the weather thousands of kilometres away, a catastrophic earthquake on the far side of the globe has the ability to disrupt things right here. One-quarter of the world’s supply of automotive electronics comes from northeast Japan, the region devastated by the March 11 earthquake and tsunami. Because auto-parts supply networks are intertwined, few major car companies may be able to escape the effects of the Japanese disaster. Toyota, the world’s largest automaker, says there are approximately 150 parts — mainly electronic, plastic and rubber components — whose short supply is impacting its new-vehicle production. Its manufacturing plants in Japan are currently working at 50 per cent of capacity due to parts shortages, while those in North America are operating at 30 per cent of capacity. Other Japanese makers are managing similar challenges. “Expect the full impact of the Japan disaster to affect availability and thus pricing later this summer and fall,” warns Joel Cohen, president of the Toronto Automobile Dealers Association (TADA). “Shop early for best availability, selection and best pricing, especially popular compacts and subcompact cars. As the price of gasoline goes up, the availability of these cars will decrease proportionately.” Industry observers agree the old mantra — “there’s never been a better time to buy a new car” — may have finally run its course. “The earthquake has created supply issues; many models will be in short supply in the coming months,” reiterates Mark Derry, an automobile advisor who counsels clients on new- and used-car purchases in the GTA. “Already, I have a customer who’s been told he’ll have to wait until the fall to receive a Lexus CT 200h hybrid.” Toyota admits in its media release that it will be November or December before normal production levels are restored. Consumer advocate Mohamed Bouchama of CarHelpCanada.com reports that 2012 models of Canada’s favourite automobile are only trickling into Honda showrooms. Some dealers are just taking orders on the new Civic. Basic economics dictates that when supply is constricted, the price goes up. Bouchama says that while Honda’s sticker prices remain unchanged, dealers will be reluctant to discount their small allotments of cars. “The mark-up has gone up, not the sticker,” says Bouchama. “Civic buyers would be lucky to get a...
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