For the last week, the news cycle has been dominated by two huge stories. The earthquake and tsunami in Japan and the turmoil in Libya and the Middle East. Believe it or not, both of these stories will probably impact your daily commute.
The crisis in Japan will have a huge effect on the building of cars, and the Mideast issues are already forcing gas prices up.
Adam Goldfein, a car buying expert who hosts a talk show on AM 750 and now 95.5FM NewsTalk WSB calls it a “perfect storm” in the automotive world.
“Oil is topping $100 a barrel, regular unleaded is over $3.50 a gallon and we haven’t yet hit the summer time when the demand is going to increase, which is only going to further drive those prices up,” Goldfein said.
When gas prices go up, the value of small cars goes up. Enter in the catastrophic events in Japan, the world’s leading automotive manufacturer of both cars and car parts. Pretty soon there are going to be a lot less cars available.
“The earthquake took offline all of the Japanese automakers and suppliers,” Goldfein said. “They’re out. They are not producing vehicles right now. So when you stop producing vehicles and use up that new car supply, you have less supply on the ground, which is going to drive prices up and eliminate the need for dealers to put incentives out there.”
This won’t only affect Japanese automakers. Goldfein says the entire automotive industry worldwide will be hit.
“This doesn’t just impact Japanese manufacturers. All of the suppliers like Panasonic and Sanyo that provide batteries and chips and semi-conductors to American auto makers are also impacted by what’s going on over there.”
If a car is built in the United States, even five percent of its parts are from Japan, it could prevent the production of that vehicle.
“It’s a global supply base. No car maker will be immune to this,” Goldfein said.
So, how soon will be this felt at the car lot?
“In the next 15 to 30 days you are going to feel it, in the next 60 days you are going to see it,” Goldfein said. “Typically dealers have 45 to 60 days worth of cars on the ground. As those vehicles get eaten up, they are not going to be re-supplied.”
If you are in the market for a car, Goldfein thinks now might be the time to pull the trigger.
“If they are looking for a fuel efficient, used car, do it now. Used cars are going to be in higher demand.
Trucks and SUVs should be stable.”
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