Wallet-Pinch: Car Prices Rising Off Japanese Earthquake Aftermath
Japanese Brands raising prices the most, while they see May sales falloff
Overall new prices increased $150 in the first week of May, compared with the previous week and $350 since the March earthquake. Japanese cars had a higher increase in prices than U.S., Korean or European brands: $250 more on average than the last week in April.
Full-size cars, like Toyota Avalon and Hyundai Azera, saw the biggest jump--up $230 on average. Mid-sized cars like Honda Accord and Toyota Camry climbed an average of $220. And compact cars, like Toyota Corolla and Honda Civic rose an average of $160.
What were some of the specific model by model price hikes, according to Edmunds.com?
The Honda Accord was up $480.00. Honda CRV was up $300.00. Honda Pilot was up $330.00. Toyota Corolla was up $220.00. Mazda3 was up $200.00. Ford Fusion was up $150.00.
Prices of Japanese models went up in large part because of supply shortages due to the suspended production of many auto parts and components plants in Japan, which in turn forced automakers like Toyota and Honda to dial down production of many popular models.
Just when consumers normally flock back to new-car showrooms expecting summer clearance deals, they may not find them as generous as in past years. "One big question as we enter the summer selling season is how the collision between car buyers looking for seasonal deals and carmakers raising prices will all play out," says Edmunds.com CEO Jeremy Anwyl.
Japanese brands Toyota and Honda are already feeling the pinch in their May sales, owing to both shortage of cars and higher prices. Automotive News reports Toyota sales were down 50% in the first ten days of May, compared with a year ago, while Honda sales were down 33%.
It's not just new car prices being effected by the Earthquake. The shortage of several models, especially Japanese makes, has created a bubble of pricing around many used cars.
The shortage of small fuel-efficient models that are imported from Japan, such as Honda Fit, Toyota Yaris and Nissan Versa, has caused a run up in prices of such cars at the auctions dealers attend to fill up their used car lots. Automotive News reports that some dealers have been paying $10,500 for Hyundai Accents, for example, about $2,000 more than they paid a year ago.
Indeed, there are some cars selling for more money as used cars this year than they sold for as new in 2010. See a few examples here.
Consumers should expect to see new and used car prices higher in the next several months as automakers not only increase sticker prices, but also decrease the incentives they put on the cars. The one silver lining: if you are trading in a small fuel efficient car, you should do very well on the trade-in value.
- Great used cars for less than $10,000
- Owners say these cars aren't very good deals
- New Car Buying Guides
- Cheapest new automobiles in America
- Fastest-depreciating cars in the United States
- Find and compare 2017 Models