Automakers and dealers will gain pricing power in April as U.S. vehicle stocks dwindle because of the earthquake crisis in Japan.
But even in March, automakers and dealers netted an extra $300 or more on every new vehicle than a year ago because of lower incentives. That's according to J.D. Power and Associates and TrueCar.com, which calculate incentives and transaction prices by tracking sales at thousands of U.S. dealerships.
Factories will slash incentive spending even faster in April as quake-related production cuts create vehicle shortages on U.S. dealer lots, said Jeff Schuster, J.D. Power's executive director of forecasting.
"We're looking at lower incentive spending in April than we expected," he said. "We expect overall levels to continue to fall this spring, with more pronounced declines for inventory-short Japanese brands."
Schuster said incentives have been declining since 2009. "So far in March, we're off about $300 from both February and March 2010," he said.
TrueCar.com, which has a different measuring method, estimated the industry average for incentives in March at $2,432, down $366, or 13 percent, from last March. Vehicle transaction prices were flat overall in March, but that masked a rise in prices for comparable models as consumers bought less expensive vehicles, TrueCar.com analyst Jesse Toprak said.
The U.S. industry started March with a 60-day supply of light vehicles, smaller than normal for the start of the spring selling season. Production stoppages at Japanese assembly plants -- and elsewhere around the world from a lack of Japanese parts -- will affect U.S. supplies by early April, said Jim Hall, principal of 2953 Analytics.
"It's three-and-a-half to five weeks shipping from Japan plants to dealerships" in the United States, he said. "If cars are in short supply, dealers will mark up the ones they have."
The recovery time of Japanese production will determine the depth and duration of the tight-inventory pricing power of automakers, said George Magliano, director of North American auto research for IHS Automotive.
If normal production resumes by May 6, "the production decline will have a small effect on U.S. sales that can be made up by year end," Magliano said. But if production is disrupted beyond early June, "it will significantly reduce U.S. sales this year and possibly into 2012," he said.
But Magliano says pricing power has swung from consumers to automakers and dealers.
"That was already in the works naturally," he said. "Consumers are paying more for cars. This would just add to it."