It's been nearly two weeks since Japan was hit first by the country's strongest earthquake at an 8.9 magnitude, then by a 23-foot tsunami that reached miles inland. The country also faces ongoing concerns about efforts to contain the crippled Fukushima nuclear power station.
As the country struggles to locate its missing -- the Kyodo News reports 21,459 killed or still unaccounted for -- more than 300,000 people living near the troubled reactors have been relocated. Recovery efforts are hindered by rolling power outages, and plans to rebuild will be costly, as Dow Jones estimates insured property losses could reach from $15 billion to $35 billion.
As horrible as the situation is for Japanese citizens who are struggling just to find access to power, water, and transportation, the effects of the disaster reach far beyond the country's borders, as people around the world rely on Japanese technology not just for big-ticket items like high-tech home electronics and automobiles, but for the tiny computer circuits that are found in practically every electronic device. And even as Japanese auto manufacturers strive to get their assembly lines back into production, there is concern about components supplied by smaller, second- and third-tier manufacturers.
How will Japan's Disaster Affect the American Automotive Industry?
American consumers are concerned about falling supplies of high-mileage cars made only in Japan, such as the Honda Fit and Toyota Yaris, and hybrids such as the Toyota Prius. According to Jesse Toprak, VP of Industry Trends and Insights for TrueCar.com, "Almost all vehicles that have had a loss in production will have an increase in transaction price. The vehicles that will have a more significant increase will be hybrids and the more fuel-efficient vehicles."
TrueCar.com data shows that Toyota Prius prices have been on the rise since late February, when fuel prices began increasing significantly. (Before gas prices began to increase, the vehicle price had been on a steady downward trend to just below invoice, however it is currently pricing close to MSRP and rising daily.) Japanese supply concerns are continuing to fuel dealer price increases on the Prius, which had already become the number-one most searched vehicle at TrueCar.com due rising gas prices.
A report at IIHS Global Insight indicates that Honda is not accepting orders for any Honda- or Acura-brand vehicles made in Japan while the company is evaluating its production situation. Unfortunately, after witnessing a trend of decreasing dealer prices, the Honda Fit is also showing a slight pricing increase as a direct result of recent vehicle supply concerns.
Supply Issues Do Not Affect Only Japanese Cars
Japan is a major source of electronic components for autos, says Business Week, providing about 14 percent of the parts used in domestic automotive production. According to Toprak, "The biggest unknown relates to the potential shortage of Japanese parts for vehicles made elsewhere. This could have major impact on global output, at least temporarily." It's already affecting General Motors, which suspended Chevrolet Colorado and GMC Canyon pickup truck production at its Shreveport, Louisiana, assembly plant for the week of March 21 due to a shortage of parts coming from Japan.
Ford Motor Company uses Sanyo batteries from Japan for its Fusion hybrid sedan that’s assembled in Mexico. According to Business Week, Ford -- the second-largest U.S. automaker by unit sales -- hasn't had any supply disruptions yet, but is continuing to monitor its provider.
Meanwhile, according to Bloomberg, Chrysler expects it could take four to six weeks for Japan’s disaster to affect its supply chain.
Ultimately, we must wait and see what happens during the upcoming weeks to learn how long it will take Japan to recover from the devastating effects of its tragic trifecta. In the meantime, our hearts and prayers are with all the people of Japan as they work to recover from this disaster. If you would like to help the victims in Japan, there are many ways you can give assistance. From the Red Cross, to the Salvation Army, to Save the Children, this inclusive article at Yahoo! offers a broad assortment of relief and recovery organizations.
