Mendoza School of Business

Japan quake having effect on new car stock, parts

Published: April 7, 2011 / Author: Megan Doyle

The local automobile industry is now feeling aftershocks from the earthquake that rattled Japan on March 11, as dealers see the effects of the disaster on their lots.

General manager Bill Crowder at Benton Harbor Signature Toyota said Toyota executives canceled his dealership’s April order.

“Basically they took our first of the month order … and canceled it,” he said. “Some of that product will be available for our mid-month order, but some will not.”

The Toyota Prius will most likely be the hardest hit vehicle in coming weeks, Crowder said.

“I believe it is slimming up our inventory on Prius pretty quickly,” he said. “The Prius is our highest volume Japanese product. But we’re not out.”

The cost of a new Prius rose with limited supply.

“I was concerned about Prius availability,” he said. “The transaction price could be more. On average, a Prius is costing about $500 more right now than 30 days ago.”

In response to the recent challenges for the dealership, Crowder said, he increased his stock of used Prius units.

“I think it’s going to affect overall our products in the local area,” he said. “Where you could choose from 10 or 15 units, the choice is now maybe between five units. I don’t believe, however, that we will run out of products. We will just be a little tighter.”

Roughly 129 parts were placed on limited availability, Crowder said, but Toyota executives tightened these restrictions to prepare for possible shortages.

“For those people concerned about their car where they might need a repair or a part, that’s why Toyota tightened restrictions,” he said. “I think they are being proactive rather than reactive. … I think it’s smart.”

Notre Dame professor of finance Jeffrey Bergstrand said Indiana should expect a slower economy in the months after the earthquake.

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