TRENDS: Japan Situation May Cause Parts Prices to Rise

The disruption for Japanese automakers caused by the earthquake and tsunami in March could result in more than just scattered and short-term parts shortages.
The most popular Japanese sedans are assembled in U.S. plants using locally sourced parts, according to Greg Horn, vice president of industry relations for Mitchell International. But, Horn said, parts shortages are more likely for the higher-end brands – such as Lexus – and for smaller vehicles such as the Honda Fit and Toyota Prius, which are still built and imported from Japan.
Japan also is the third-largest producer of automotive-grade steel, and exports 43 million tons of it a year. Decreases in output from those factories – all Japanese companies have been asked to reduce their electrical use by 25 percent – are raising steel prices globally, Horn said. That will likely affect pricing for all sheet metal parts, OEM and non-OEM, and as those prices rise, prices for used parts likely will rise as well.
“So you’re going to see this event’s impact stretch well into next year,” Horn said. “We’ll have to wait and see what the final tally is, but we’re going to see inflation overall in average repair severity because of rising parts prices.”