Monday, 25 April 2011

Automotive Perfect Storm?

134.2, 135.3, 133.9. Are these numbers I picked out of a hat?  NO. These are the prices we are seeing at the pumps.

How are we coping? According to Bill Visnic, analyst and senior editor at Edmunds' there has been a spike in drivers trying to unload their gas-guzzling SUVs and a ripple effect in the small used car market. Visnic notes that in addition to the gas situation, the shortage of parts in Japan because of the earthquake and tsunami have added to pressure on car prices. In addition, the fact that the economy is improving is sending all used car prices higher, not just for small cars.

Also, in wake of production stoppages in Japan incentives from Japanese brands have evaporated and price increases are being seen even of rival models that would be the closest substitutes for these Japanese brands.

According to Edmunds' proprietary measure of car prices, a three-year-old Honda Accord has soared in value by 24 percent since last September. A similarly aged Hyundai Sonata is up 22 percent, the Honda Civic is up 13 percent and the Nissan Sentra has risen 12 percent.
"Particularly the Civic and Sentra are the standard bearers in the fuel efficient category," Visnic says.
Sounds like the brewings of the 2008 Automotive Crisis all over again only the economic picture looks a little better now then it did back then. Are we going to witness what we did then? GM & Chrysler slipped into bankruptcy in a perfect storm of gas prices, the credit crunch and lack of consumer confidence. Will we see Japanese manufacturers like Toyota, Honda and Nissan file for bankruptcy too? Maybe I'm jumping the gun or does it have all the ingredients to whip up the storm:
  • Parts Shortage
  • Japanese Automobile Shortage
  • High Gas Prices 
  • Prices of used cars Increasing

(Should I add Toyota's "100-millionth" recall that it just announced after a whistleblower in Vietnam leaked information about the Toyota Sienna?)
Too soon to tell? What's your opinion?
Sources: msnbc; automonster 

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