Fuel-Efficient Car Buyers Facing A Double Whammy

March 23, 2011

A double-whammy is facing some new car buyers of popular fuel-efficient Japanese vehicles. First, the rising price of gasoline is putting upward pressure on the price of small, fuel-efficient vehicles. Second, supplies of many fuel-efficient vehicles will probably be disrupted by manufacturing and supply chain problems as a result of the recent earthquake and tsunami in Japan.

The first issue is covered in my previous article, Will the Price of Fuel-Efficient Vehicles Skyrocket Later This Month? The second issue is unfolding before our eyes as we watch coverage of the devastation and loss of life in Japan as a result of the natural disasters that recently hit that country.

At issue are automobile manufacturing plants in Japan. Those in the immediate area of devastation have been temporarily shut down. Others that are out of the immediate area experienced shut downs to conserve electricity or are experiencing supply chain problems from parts manufacturers that were more directly affected by the quake and tsunami.

Fuel-efficient vehicles most at risk

U.S. car dealers are still waiting to see exactly how the supply of news cars—and therefore prices—will be affected as a result of all that is happening in Japan.

The dealers I’ve talked to are most concerned about supply issues relating to vehicles actually made in Japan. They don’t know for sure if having a consistent supply will be affected over the coming weeks or months, but many are worried. Honda dealers are concerned about the Insight, Fit, and CR-V models. Toyota dealers are worried about the Prius and Yaris. Nissan dealers are worried about the Leaf, Rogue, Cube, and 370Z. There are also some Acura, Infiniti, and Subaru models that could be directly affected.

Why wait?

If you are planning on purchasing a new, fuel-efficient vehicle in the next few months, the question I'm wondering is, “Why wait?” You have to ask if the price of gasoline is going up or down. Most experts don’t predict a big drop in gas prices soon. This means there will probably be continued upward price pressure on vehicles that get great gas mileage.

However, many of those same models could be affected by recent events in Japan. This is a double-whammy the American consumer does not need right now. That’s why, if you plan on purchasing a new car soon anyway, why wait?

There are few other considerations to take into account when deciding if you should buy now. First, if the supply of some Japanese models is reduced, it would be natural for those manufacturers to reduce or eliminate many of the incentives that have been used to increase sales by effectively reducing the end-user’s cost. Also, will Japanese manufacturers increase their prices to off-set higher production costs that result from the natural disasters? More reasons to buy now.

Pre-owned vehicles

Finally, a word about used cars. If the supply of new, fuel-efficient vehicles is reduced—forcing prices higher—this can only put pressure on the pre-owned market. The used car market has been tight with higher prices for months anyway. Recent events can only make matters more difficult for those shopping for a pre-owned vehicle. This means they, too, should buy now if possible.

The bottom line is this: for both new and used car buyers, it’s probably better to be safe than sorry. Buy now or be prepared to pay more later for a new or pre-owned, fuel-efficient vehicle. Good luck.

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