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Cars may cost more in wake of Japan's tsunami , dealers say

Shortages in wake of Japan's tsunami expected to fuel price increases.

April 15, 2011|By Bill Kisliuk, bill.kisliuk@latimes.com

The tsunami receded in Japan more than a month ago, but local auto dealers are bracing for economic waves in the form of price increases and possible supply shortages.

Even as an improving economy and spiraling gas prices spur sales of smaller, more efficient cars, dealers say uncertainty about manufacturing in Japan — where many cars, parts and specialty paints are produced — is worrisome.

The impacts are not across the board, said A.J. Mendoza, sales manager at Community Chevrolet in Burbank, adding that he expects the dealership to feel little effect.

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And Steve Bussjaeger, who sells Fords and Mazdas at Star Auto Group in Glendale, said dealers in domestic vehicles will gain a competitive edge in the short term as Honda and Toyota — and to a lesser extent, Mazda — face the most serious delays.

Johnny Harrison — president of the Brand Boulevard of Cars Auto Dealers Assn. in Glendale and general manager of Lexus of Glendale — said it is too early to gauge the exact impact of the problems.

“I don’t think we’ll see any effect until the latter part of April or May,” Harrison said.

If the supply disruption is limited to a few weeks, he said, dealers won’t face a noticeable loss of inventory or spare parts.

“If it were to go over 60 to 75 days, there might be some issues,” he said. “Inventory levels are going to be reduced. Specialty colors will be harder to get.”

The disruption in the supply chain is likely to cause a price spike of 3% to 5%, Harrison said.

Dealers aren’t the only ones who are concerned.

“I’m sure we are going to have price increases and availability issues,” said Yves Bright, co-owner of BMA Auto Parts in Glendale. “Supply from Japan is definitely going to slow down.”

BMA is a parts wholesaler for independent repair shops and others, with a focus on German makes. Bright said 10% to 15% of his business is in parts for Japanese cars.

Meanwhile, dealers report growing demand for fuel-efficient vehicles in their fleet. Fuel prices have risen by 14% in the last three months and 27.5% in the last year, according to the Department of Labor’s Consumer Price Index.

“With gas being over $4 a gallon, it is a matter of who has the most entries in 30-miles-per-gallon-plus category,” said Bussjaeger.

Gas-sippers, including the Ford Fiesta and Focus, are in high demand, he added.

“We are selling them as fast as we can get them,” he said.

At Community Chevrolet in Burbank, Mendoza said the Chevy Cruze is selling well, and the dealership only has a test model of the all-electric Chevy Volt in stock.

“If they were more available and on the lot, I don’t think they would sit here for any length of time,” he said.
 
 

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