The motoring industry, among others, is likely to be hit following the tragic earthquake and tsunami that hit Japan earlier this month, on the 11th March 2011. The cost to human life as a result of the devastation is immense and the disaster is said to be impacting on literally millions of people and businesses globally. Japan is home to many of the car manufacturers such as Honda, Nissan and Toyota.
Many roads, air and sea ports in Japan have been destroyed as the earthquake and tsunami left a massive trail of destruction behind it. As a result, the manufacturing of car parts has had to grind to a halt, and this could continue be the case for many months, or perhaps even years to come.
Toyota and Honda have put production on hold until the 27th March at least, which will have the biggest impact on the Honda Accord, Jazz Hybrid and the Toyota Prius. Toyota are said to have lost production of 140,000 cars since the earthquake. High stock levels of some cars will certainly help with the damage limitation. Toyota is estimated to have 6 weeks supply of new vehicles, and Nissan shipped 350 of its new electric car, the Leaf, to the UK before the disaster struck Japan.
However, both manufacturers admit they are expecting to face problems in the following months. With the potential shortage of new vehicles coming into the country, dealers and motor traders could expect to see nearly new cars holding their value, while it is predicted that new car prices are likely to rise due to the lack of supply. This will undoubtedly result in dealerships removing promotions and special offers for customers in response to the limited stock.
Ian Fletcher, senior analyst at IHS Global Insight, explains: “Although there are currently limited details about the extent to which supply levels will be affected, dealerships will stop offering discounts on the list price for models in high-demand”. While it is too early to determine the extent to which the motor industry will be affected, dealerships and motor traders can expect to see the knock on effect for some time to come.
This information was brought to you in conjunction with the specialist motor trader insurance provider Think Insurance