SANTA BARBARA, Calif. -

ALG officials believe the recent Japan disasters could lead to a 10-percent jump in new-vehicle prices, as well as growth in predicted residuals, though the company has not changed its this forecast as of yet.

ALG, a DealerTrack company, broke it down to two levels. First, the company analyzed what impact a 20-day production disruption would have on prices. Next, the company reviewed the impact 100 days of production disruption would have. In both cases, the company clarified that the days off production do not need to be consecutive.

Basically, the 20-day interruption would likely have little to no impact, while the longer interruption could cause an 8 to 9 percent increase in vehicle pricing on some models and a 0.2 to 0.7 percent increase in 36-month residual values.

While the company pointed out that the various Japanese brands move in a variety of segments, a lot of the impact to new-vehicle prices and residuals will depend on the production location and the degree of market share for the models.

“ALG is estimating that the impact from the 20-day interruption will have a very minimal impact on the used-market supply situation, which will not impact 36-month residuals at a significant level; on average, the 20-day production interruption from the Japanese brands displays a rather small share of total overall production of the industry. Estimates show that the 20-day interruption caused by the Japanese OEMs amounts to a reduction of about 1 to 2 percent of total production for the industry for 2011,” according to ALG analysts.

“However, the impacts from a longer production disruption are predicted to be a bit more visible but still rather small — reduced production implies less inventory and thus upward pressure and consequently used-market pricing. ALG has evaluated a scenario where the Japanese production would be interrupted for 100 days. The estimated impact is more visible on the smaller segments,” officials highlighted.

“The top five impacted segments are the entry compact, entry luxury, entry premium CUV, compact SUV and mid-compact. ALG predicts that the effect on 36-month residuals is roughly 0.7 percentage points for the entire entry compact segment. This is mainly driven by the reduction in supply of entry compact vehicles that are currently produced exclusively in Japan (i.e. Honda Fit). Larger and sportier segments show an estimated impact that is negligible. These impacts assume that non-Japanese OEMs will not ramp up production to fill the production gaps by Japanese manufacturers through increased incentives,” analysts explained.

While the Honda Accord is mostly built in the U.S., it would likely not feel the pressure as much, ALG noted.

However, based on reduced production, meaning less inventory, ALG is predicting new-transaction prices could rise by about 1.5 percent on average for the 20-day production interruption scenario. Meanwhile, if the 100-day scenario plays out for the Prius, ALG predicts that new-car prices for these models could climb 9 percent. This is if inventories drop, but demand remains strong.

“Currently, the Prius is manufactured exclusively in Japan and thus a three-month interruption will greatly affect the supply of new Prius models in the U.S. market,” analysts highlighted.

However, ALG said it expects any growth in transaction prices to be temporary and drop to normal levels when production ramps up under the 20-day scenario.

As for the 100-day scenario, ALG pointed out that it would take some time for inventory to build, so prices would return to current levels in the later months of 2011.

“These estimates assume that no changes in demand take place. In other words, buyers are not substituting away from Japanese vehicles to other brands in the short term as a consequence of the production reduction and therefore possible inventory shortfalls and rising prices,” company officials stressed.

ALG officials said their staff will continue to closely monitor events in Japan and make necessary adjustments to upcoming editions as needed.

“At the time of this publication, ALG is making no immediate adjustments to our current residual value forecast,” analysts said in their report.

Commenting on the analysis, Eric Lyman, director of residual value solutions for ALG, said, “With the eyes of the world focused on recovery efforts in Japan, ALG is carefully measuring the impact this disaster may have on future residual values and current market pricing. Based on current available data and OEM plans, we believe there will be minimal long-term impact, and a short-term spike in new-car pricing on some models manufactured and sourced from Japan. However, further complications and supply shortages could have a slight positive impact on residual values.”