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Japan Disasters Might Be Disastrous For U.S. Auto Buyers

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Vehicle costs are beginning what is predicted to be a prolonged upward climb in the wake of the Japan earthquake, tsunami and nuclear crisis. Automotive factories shut down after the Japan quake will affect supply of cars built in that country, as well as businesses who depend on Japanese-made auto parts. Auto experts suggest that consumers act now before the law of supply and demand makes fuel efficient cars both harder to find and more costly. Source of article - Expect rising car prices as Japan earthquake cuts into supply by Car Deal Expert.

Why do I have to pay more for a vehicle?

Getting a discount or incentive from buying a U.S. made car will not last long. Automotive industry experts expect this to end soon. The Japan earthquake, tsunami and nuclear crisis is severely tightening supply for parts used to build American vehicles, as well as certain models built only in Japan. The price of a vehicle has increased already. Really, this ought to continue upward. There may be small rises in costs for cars. Discounts will not be there much longer. Buying will end up paying much more for fuel efficient vehicles since they have gone up in popularity quite a bit. In addition to more expensive Japanese brands, prices for successful new United States cars and Korean compacts are expected to rise as vehicles like the Toyota Prius and Honda Fit become harder to find.

Hard to discover fuel efficient vehicles

Before Japan’s earthquake increased gas prices, they were already inflating fuel efficient vehicle prices. Now that the U.S. and other countries are waging war in Libya, gas prices are anticipated to rise even more. Cars that have been made in Japan such as the Honda Civic hybrid, the Honda Fit and Toyota Prius have already started to be purchased more than ever. TrueCar.com explained a huge decrease in the average $1,020 discount on Honda Civics is expected soon. By May 1, it should be down to $470. The Toyota Prius $700 discount won’t last either. An $800 premium is expected to replace it. There are other cars that are on the market and fuel efficient. This involves the Nissan Leaf electric car, the Mazda3, Honda Insight and CR-Z hybrids, Honda Insight and Toyota Yaris.

Many people don’t want a lease anymore

Getting a good deal on the above vehicles is unlikely. They're all well known and wanted. However, looming shortages may benefit people who want to get out of a lease early and into a more fuel-efficient automobile if they act now. The used vehicle market needs many after-lease cars to deal with. There was a huge decrease in the number of trade-ins once the recession ended. Auto leases during the worst of the downturn were assigned artificially low after-lease values. Now there is a huge increase in the value of those cars. They are worth much more. Now, the car is worth enough that a lease holder can sell it and make money. Enough equity has been put in the vehicle to do this. Plus, the dealer gets a profitable used vehicle.

Citations

CNN Money

money.cnn.com/2011/03/22/autos/japan_earthquake_car_prices/?npt=NP1

Wall Street Journal

blogs.wsj.com/drivers-seat/2011/03/21/car-prices-likely-to-jump-as-shortages-spread/?mod=google_news_blog

USA Today

usatoday.com/money/autos/2011-03-21-prius-fit-rising-prices.htm

MSN Money

money.msn.com/business-news/article.aspx?feed=AP&date=20110317&id=13175802

Confident Consumers Spur Retail, Remodeling Hiring (crm-daily)

A more confident consumer is giving a lift to the improving job market. The
economy added a better-than-expected 171,000 jobs last month, the Labor
Department said Friday. A healthy portion of the additions came from sectors
such as retail and construction that were lagging but now are benefiting from
a more bullish consumer.

Retail employment rose by 36,000 in October, the most since January 2011, and
it's up by 82,000 since August, the biggest three-month increase in several
years.

"Households are starting to contribute more to the economic recovery," says
Mark Zandi, chief economist at Moody's Analytics. The recovering housing
market, in particular, is bolstering employment in several sectors, he says.

Diane Swonk, chief economist at Mesirow Financial, says rising home prices are
making consumers feel wealthier, and mortgage refinancings are putting more
cash in their pockets.

Reports last week showed chain-store sales rose briskly last month and
consumer confidence reached the highest level since February 2008.

Vehicle sales, though down slightly from the 41/2-year highs hit in September,
are still 7.2% above a year ago as consumers continue to replace aging
vehicles.

And home sales and housing starts are picking up noticeably.

The accelerating activity is filtering into payrolls, ...

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