Dealers experiencing shortage of Japanese cars

June 14, 2011 3:42:40 PM PDT
It has been a rough couple of years for car makers, from the economic downturn to the credit crunch, car dealerships are eager for good news.

Now, Japanese car dealers are dealing with supply shortages due to the recent earthquake and tsunami.

The supply chain for Japanese cars is still not back to what it was before the earthquake and that means some car lots across the country are short on cars, but that could also be sending buyers to U.S. auto makers.

At the John Eagle Honda dealership you can see the effects of the Japanese earthquake on the car makers supply chain.

"We are extremely low on inventory right now," said Mac DeLaup, president and managing partner of John Eagle Honda.

DeLaup says this dealership typically has 400 cars on the lot. Right now there are about 100. Even so, DeLaup adds the impact on prices has not been extreme.

"That might be somewhat true because the fact that Hondas, and Toyotas and specific imports right now are somewhat low inventory, it might raise prices a little bit, I would estimate only slightly," he said.

Both Toyota and Honda have stated they believe profits will be down this year, anywhere from 30 to 60 percent. DeLaup says dealerships are staying afloat by turning to used car sales.

"The consumer has an incredible value on the vehicles right now as they trade them in; they are almost worth retail value right now," DeLaup said.

DeLaup says his dealerships still get shipments of vehicles each week, but while he waits for inventories to pick up, U.S. auto makers are seeing a boost in sales.

"May was a tough month for the industry as a whole," said W.C. Smith, vice president of Monument Chevrolet. "GM was up and obviously the Japanese manufacturers were down."

Smith says Japanese car shortages are just part of the reason why U.S. car makers did better; high gas prices are playing a part too.

"Obviously with small cars, if I had more I would be selling more, I am standing here in front of a Cruise, and if I had another 50 of those I would have them gone in a month," Smith said.

As for Japanese cars, dealers expect a return to full inventories in August and add they still have cars.

"They will find a Honda on our lot," he said.

As for the cost of used cars, some experts say those prices will start falling as the cost of gas goes down.

Kelley Blue Book expects used car prices to fall about five percent by the end of summer.

At this point, dealers aren't at risk of closing. They say they are leaning on that used car market and sales of fuel efficient cars to get by right now.

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