Will Japan Disasters Make Hondas, Toyotas More Expensive?

March 21, 2011— -- When I heard the news that Toyota had decided to delay production of vehicles in its Japanese plants for another week -- and that Honda had already done so -- my immediate thought was that Japanese cars were going to go up in price.

After all, under the law of supply and demand, there was going to be less supply, so I thought prices would rise. I was already envisioning the story I would do for "GMA," visiting dealerships with lots of empty parking spaces and talking to disappointed customers who either couldn't get the car they wanted or were going to have to pay more for it. But, turns out my Chicken Little reaction was too hasty.

The experts at auto website Edmunds.com know vastly more than I do about how car sales actually work. For example, Edmunds points out that auto pricing has a lot to do with the incentives that manufacturers offer to dealers. Those incentives give dealers more wiggle room to sell a vehicle at a lower price and still make a profit on it.

"Current incentive programs are in place through the end of March," explained Edmunds Chief Economist Lacey Plache, "so it is unlikely that any price increases due to lowered incentives will show up before then." In fact, Edmunds analyzed whether Japanese auto prices went up in the days right after the quake and tsunami and found no change.

However, Edmunds sees the potential for price hikes and model shortages. "In the longer term, pricing for Japanese-built cars could be affected for many reasons," Plache said, "including increased production costs and the possibility that Japanese automakers may have a diminished ability to offer incentives due to costs of reconstruction in Japan."

Edmunds CEO Jeremy Anwyl cautioned that "Over the next weeks, and possibly months, it may be harder to find exactly the model with options you want."

So, what to do if you had your eye on a Honda, Toyota or other Japanese-made vehicle? "Our advice to consumers," Anwyl said, "is that if you had any notion about buying a vehicle in the next few months, there is no downside to buying now, though plenty of possible upside."

In other words, Anwyl thinks it could be a good idea to scurry over to a dealership before the end of March while the pre-disaster incentives are still in place. It's not that the thinks you'll get a bargain now, but rather that prices could go UP later.