Japanese tsunami led to 3-6% higher transaction prices for certain cars

SANTA BARBARA, Calif., Dec. 21, 2011 — The Japanese disaster resulted in a nearly 6 percent jump in new vehicle pricing for one key model, according to ALG, a subsidiary of TrueCar, Inc. and the industry benchmark for residual values and depreciation data.

After the March 2011 Japanese earthquake and tsunami, vehicle production in Japan dropped to record lows of roughly 40 percent of Q2 2010. The disruption in production caused a three-to-nearly-six percent increase in vehicle pricing on some models.

In April 2011, ALG provided an initial assessment of the potential impact on new vehicle pricing. Two scenarios were analyzed consisting of 20- and 100-day production interruptions (assuming complete production halt). ALG predicted that a 100-day interruption could result in a nearly 10 percent jump in new vehicle pricing for some key models, while a 20-day production delay could cause prices to rise approximately 1.5 percent on average.

«Japanese production has been slowly restored over the last few months, with August 2011 showing year-over-year growth again,» said Eric Lyman, Vice President, Residual Value Solutions, ALG. «While supply shortages did push up new car prices in the short term, a relatively fast production recovery resulted in those spikes being less significant than originally predicted. However, actual pricing increases were within the estimated increases initially forecasted.»

ALG looked at two key models and actual pricing increases: the Honda Fit and Nissan Rogue. The new vehicle price for the 2011 Honda Fit grew by roughly 5.6 percent from February to June 2011 compared to nearly 2.3 percent for the Entry Compact segment according to ALG’s Auto Market Pulse data. This growth was between the 20- and 100-day scenario initially forecasted by ALG (1-2 percent for 20 days and 7-8 percent for 100 days). Honda’s local production of small cars in Japan caught up to the previous year’s level in August of 2011.

The new vehicle price for the 2011 Nissan Rogue grew by approximately 3 percent from March 2011 to June 2011 compared to a very flat Compact SUV segment growth rate of 0.3 percent. This growth was also between the 20- and 100-day scenario initially forecasted by ALG (1-2 percent for 20 days and 8-8.5 percent for 100 days). Nissan’s local production in Japan of trucks and SUVs recovered faster than Honda’s small car production, reaching near previous year’s levels in May 2011.

For the complete ALG Japanese Earthquake Impact and other recent news, visit: https://www.alg.com/IndustryNewsletter.

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