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Buying a car? Haggling goes on hiatus

The days of waltzing into a showroom and talking tough with a desperate salesman until you get the price you want may be coming to an end. • Turmoil in tsunami-ravaged Japan, where work at automotive assembly plants and parts factories has slowed or halted — coupled with soaring global gasoline prices and lean inventories — has helped raise the prices of vehicles being sold in U.S. showrooms.

The supply squeeze is affecting Japanese automakers, but even some of the domestic automakers are grappling with shortages of Japanese-made components that go into their cars, analysts said.

All that, combined with rising interest in fuel-efficient vehicles as crude-oil prices soar, is amounting to a supply-and-demand shift less favorable toward consumers, industry observers said.

"They're going to pay more than they did in January on a lot of vehicles," said Michelle Krebs, senior analyst at online car-buying resource Edmunds.com, in West Bloomfield, Mich. "If they can wait till production becomes more normalized, then prices should stabilize."

According to dealership sales data analyzed by Edmunds, the price of a typical vehicle went up $120 during the first week in April compared with the first week in March, with increases biggest among Japanese compact models, Krebs said.

"Vehicles like Mazda, for example, the average price went up $370 a vehicle, and that was mainly because of their small cars, the Mazda 2 and 3," she said.

Growing demand for fuel-efficient vehicles by consumers grappling with high gas prices is one reason.

"Nissan, we've got them up $120 a vehicle; $200 across-the-board of all Hondas," she said. "Subaru Forester … increased about $320."

Increases were modest to flat among domestic models.

Japanese electronics, automotive and parts manufacturers still are struggling to operate at full capacity, if at all.

The most acutely hit brands are Toyota, Honda, Nissan, Subaru and Mazda, which have heavy manufacturing in Japan, said Rebecca Lindland, a global automotive analyst at IHS Automotive in Lexington, Mass. (Korea-based Kia and Hyundai, she said, seem fairly insulated from the parts shortages.)

"Right now, many dealerships aren't taking orders for some of these products, like the entire (Nissan) Infiniti line that is imported," Lindland said.

"The consumer is not necessarily going to be able to order their favorite Infiniti or their favorite Prius because of a lack of supply," she said. "We also aren't seeing full production yet."

In past years, buyers could readily find incentives such as zero-percent financing and rebates on domestic and foreign vehicles. Automakers tried to move their big-ticket vehicles with such sweeteners because consumers were reluctant to spend, thanks to the Great Recession and unemployment.

But more recently, automakers began sharply reducing the number of vehicles they send to showroom lots, in a move to stabilize prices.

It seemed to work.

Wholesale prices for light vehicles and trucks increased 0.6 percent in February and 0.9 percent in March, according to Producer Price Index data released Thursday, said economist Joel Naroff.

The February uptick stood out, he added, for the fact that it preceded the tsunami, Japan's nuclear crisis, and the production bottlenecks that began as a result in March.

"The problems with Japan would not have shown up in the February numbers," Naroff said. "The fact is, if you look at the sales numbers for vehicle sales, they've been slowly and steadily moving upward."

Buying a car? Haggling goes on hiatus 05/05/11 [Last modified: Thursday, May 5, 2011 10:25pm]
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