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ALG: Japan Disaster, Gas Prices Drive Compact Prices Skyward

In their latest report, analysts at DealerTrack subsidiary ALG are sticking with predictions they made a month ago that a prolonged production interruption of Japanese-made vehicles could cause prices on some models to jump by as much as 10 percent.

by Staff
May 10, 2011
2 min to read


SANTA BARBARA, Calif. — In their latest report, analysts at DealerTrack subsidiary ALG are sticking with predictions they made a month ago that a prolonged production interruption of Japanese-made vehicles could cause prices on some models to jump by as much as 10 percent.

The report states that a 100-day disruption to vehicle production could elevate new-vehicle prices to temporarily increase by 8 to 9 percent and drive 36-month residual values up by 0.2 to 0.7 percent. A shorter interruption in the 20-day range would not likely affect residual values but could cause prices to spike by 1 or 2 percent. 

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With fuel prices spiking, demand for small, fuel-efficient vehicles such as the Toyota Prius is on the rise as well. Last week, several analysts reported a downward trend in U.S. gas consumption that, coupled with abundant supply, could drive down the per-gallon cost of fuel by as much as 50 cents by summer. Until then, car shoppers will likely continue to consider fuel efficiency as a key selling point.

“The 2011-MY Prius has been initially trending downwards up to early March,” the report stated. “Yet the production halt from March 11th to March 24th, coupled with rising gas prices, has impacted the transaction price.”

In the last two months, the average price paid for a Prius in the United States has increased from $25,200 to $25,800, a difference of 2.4 percent. ALG says the Prius, which averaged a 27-day turn just prior to the disaster, is now rolling off many dealers’ lots in fewer than 20 days.

The midcompact segment will likely show the most dramatic near- and long-term price increases, especially for vehicles such as the Prius, Honda Fit and Toyota Yaris, which are manufactured only in Japan. However, the effects of the converging factors will be felt industrywide.

“ALG expects further price increases in the short term for particular vehicles as production interruptions and parts supply chains are still hindering OEMs to produce at full capacity,” the report stated.

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