Toyota Prius dealers see demand rise and inventories fall
Rising gas prices have reignited sales of the fuel-sipping Prius hybrid, and dealers are getting more money for the Toyota sedan. There’s just one problem — they are starting to run out of cars.
Some don’t have any in their showrooms for shoppers to drive home. Others say their stock is dwindling quickly.
Continuing disruptions caused by the March 11 earthquake and tsunami in Japan are rippling across the globe. Toyota Motor Corp. restarted the Prius factory early this week but closed it down again Wednesday to reassess its part supply. The world’s largest automaker plans to resume Prius production Thursday, but it is not expected to run anywhere near full speed.
Elsewhere, Honda Motor Co. is periodically shutting down its U.S. factories to conserve its supply of auto components. Fuji Heavy Industries Ltd. is slowing production of Subaru brand cars at its Lafayette, Ind., plant because of component shortages. And Toyota has told repair shops that it’s going to ration more than 200 spare parts that are in short supply.
Research firm IHS Automotive said production and part supply issues could affect as much as a third of the global auto industry over the next several months.
“This may ultimately rank as the largest peacetime disruption of world auto production,” said James Rubenstein, an auto industry analyst and geography professor at Miami University in Oxford, Ohio.
The combination of rising gasoline prices and consumers worrying they won’t be able to get their car of choice is prompting some to start shopping now.
Irma Vega, an account supervisor at a Los Angeles advertising agency, pulled the trigger Sunday, buying a Prius to replace her aging Chevrolet Malibu.
“I figured I need to go check it out. The sooner the better,” Vega said, prodded by the steady rise in gas prices and reports about the production problems in Japan.
Shoppers such as Vega have helped the Prius rival the Camry sedan as the bestselling Toyota model in Southern California. Both cars are selling at a rate of about 2,000 a month in the region. California is the biggest Prius market in the nation.
The bottleneck in Prius inventory has dealers nervous. Many report they have less than a two-week inventory.
“It is a dwindling supply and getting worse,” said Dianne Whitmire, fleet director at Carson Toyota.
Whitmire estimated that Prius shipments headed to Southern California were going to fall behind by at least 1,200 cars in the coming weeks and that the number could approach 2,000 through April.
Prius sales should be brisk this weekend, putting an extra crimp in supply, said Billy Rinker, general sales manager at Toyota Santa Monica, one of the nation’s largest hybrid sellers.
That’s because a $500 rebate on the car and other financing and lease specials put in place prior to the Japan crisis are set to run through Monday, and it’s unlikely the automaker will renew them amid supply problems, Rinker said.
“For the next month I think we will have real slim pickings,” he said.
Earl Stewart Toyota of North Palm Beach, Fla., doesn’t have any new Priuses to sell. The cars sitting on its lot are either used or already sold, waiting for the buyers to pick them up.
The franchise had been selling as many as 40 Prius sedans a month. But when gas prices started to go up sales soared to more than 80 of the hybrids this month, owner Earl Stewart said. He expects to get a small shipment in April, but is worried about shipments into May.
Steven Levine, a financial planner, got a new Prius from the Florida dealership two weeks ago to replace one that was going off lease months from now. He’s glad he made the move, especially because the price of the car is rising as the supply shrinks.
“Gas prices keep going up, and I like the car.... People are pulling them off the lot,” he said.
Prius prices have risen more than $700 to an average of $26,100 in the last week since the earthquake, according to TrueCar.com’s listing of upfront “no haggle” deals.
The supply of other Toyota models could also shrink in coming weeks.
“We have good availability on everything but Prius. But that will change toward the end of April depending on what parts shortages crop up,” said Fritz Hitchcock, who owns Toyota franchises in Puente Hills, Northridge and Santa Barbara.
Others also expect supply issues will spread to more car models and brands.
Most parts from Japan leave in container ships that take several weeks to cross the Pacific Ocean. That means the worst effects of the disruption are still weeks off, said Rubenstein, the Miami University professor.
Automakers are having trouble getting a handle on the severity of the disruption. Some of that has been caused by power shortages because of the problems at damaged nuclear power generating stations in Japan.
Although the auto companies know the status of hundreds of their key suppliers, Rubenstein said they’re still unsure of how many second-tier Japanese suppliers are back up and producing parts.
A typical car contains roughly 20,000 parts. The lack of a single component can shut down an assembly line.
“Each carmaker is scrambling to find new sources of parts to replace suppliers that are out of commission,” Rubenstein said.
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