Production Struggles Continue for Japanese Automakers, Used Car Prices Soar

Used car prices soared through the recession, but the recent Japanese earthquake may push them even higher. A new report suggests the shortage of new cars from Japan will increase demand on the used-car market, driving up prices significantly.

Japanese automakers Toyota and Nissan continue to produce at half capacity at best as they continue to recover, and likely won't resume full production until mid-June at the earliest, but possibly as late as August. Last week we reported Toyota planned to resume production as early as June 3rd, but now that appears to be the absolute best case scenario. As a result of continued parts shortages, Both Nissan and Toyota have told their United States dealers they expect full production will be delayed until sometime in August unless alternative parts sources can be found.  Toyota is expected to lose some 360,000 units in total production through the first week in June, but that figure will likely continue to increase through the summer.

Nissan recently told its dealers that it expects to deliver just 7500 vehicles to the U.S. in May, far short of its 40,000 units in March. Similar decreases are expected from most Japanese automakers, leaving dealers with dwindling inventories. Many import dealers have begun to experience new-car inventory shortages, with current inventory ranging between 30 and 40 percent lower than normal levels.

Automotive News reports trade-ins aren't enough to meet the current demand, and dealers are turning to alternate methods including eBay, Craigslist, and newspaper ads to fulfill their needs. The shortage of used cars has in turn driven up the price of used cars over the past several weeks. As new-car incentives quickly shrink or disappear altogether, the price of used cars inflates, too. Compact car transaction prices are expected to grow roughly $1000 by summer, triggering an expected $650 price increase for a similar three-year-old model. Despite the rapid increase in the price of used cars, industry experts suggest prices have peaked, as the difference between new and used vehicles are now fairly close.

Are you in the market for a new or used car? Will new-car inventory shortages and the high-priced used-car segment make you reconsider your purchase? Share your thoughts in the comments section below.

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