2021 has been a pretty tough year for the automotive industry. Automakers are facing chip shortages due to Covid-19. The pandemic has an incredible impact on all areas of our lives and also on Auto Supply Disrupt.
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What is the auto chip shortage and Auto Supply Disrupt issue?
Staying home for safety leads many people to seek entertainment. We started to use more devices such as smartphones, tablets, laptops, etc. And you know what? They all have semiconductor microcircuits inside.
According to Investopedia, a semiconductor is a material product, usually made from silicon. It conducts more electricity than an insulator such as glass, but less than a pure conductor such as copper or aluminum.
Semiconductor chips are essential and sometimes necessary components of a modern car.
The majority of these chips were produced by companies in China and Taiwan. The semiconductor companies prioritized their limited supplies not automotive but electronic companies.
And for the rest of production, the changes were dramatic. The pandemic prompted the chip factories to first cancel the shift and then close early last year.
This unexpected turnaround has had a profound effect on the production of automobiles. The chip crunch cost automakers an estimated $ 200 billion globally in lost production this year.
Chip shortage in the auto industry- Auto Supply Disrupt
Ford, General Motors, Fiat Chrysler (Stellantis), Volkswagen, and Honda fought hardest the vehicle chip shortage. Interestingly, some brands, such as Toyota, do not suffer as much. This is likely due to Toyota being better prepared after 2011. The region realized how suddenly it could disrupt supply chains due to the massive earthquake and tsunami that hit Japan.
Some automakers have gone above and beyond and switched chips from less-selling models to ones that are in high demand. These include models such as pickup trucks and large SUVs. Ford, GM, and Stellantis started making cars without computers. They put the machines in storage with plans to finish them later.
Some luxurious brands like Cadillac are still available in the regular line at. Some companies have a wider range of available vehicles in stock.
In some cases, automakers have removed some features from their vehicles in order to continue production after the car computer chip shortage.
General Motors has temporarily removed the stopping and starting technology from its full-size SUVs to save on shavings. It is also removing high-definition radios from some of its Chevrolet Silverado and GMC Sierra pickups.
As the tendency for electric vehicles has been rising rapidly, it may be assumed that the situation is quite different now. EVs naturally require more semiconductors. For example, for one EV the manufacturer needs about 2000 chips, which is double the average non-electric car requirement.
Most of the processors are manufactured exclusively abroad. Due to the fact that the borders were closed for some time, the situation worsened.
As a result, the production and distribution of chips have dropped sharply.
When will the car chip shortage and Auto Supply Disrupt end?
Automakers and the US government are working hard to close the deficit and prevent the possible new car chip shortage outburst. It was only in June that the US Senate took a step forward in the fight against the stockpile crisis by passing a law.
It announced an investment in domestic microchip production with 60 votes. The “CHIPS for America Art” initiative serves to revitalize the US semiconductor industry. In November, Gina Raimando, US Secretary of Commerce, urged the $52 billion boost to support chip making.
Different specialists predict the end of the chip shortage by 2023.
Does chip shortage affect the prices of new cars?
There is a strong correlation between the chip shortage and the automotive industry prices. This is a difficult shopping climate because the market has changed a lot.
Together with growing consumer demand, this has led to higher prices for new cars.
The perfect deal you made a few years ago will never be the same again. The dealership may only discount a few hundred dollars on the vehicle, stick to the quoted price, or even charge a price higher than the manufacturer’s suggested retail price. Dealers will have little incentive to discount any of their vehicles as long as demand exceeds supply across the board.
The percentage of buyers paying in excess of the set price rose more than 50% year on year, from 8.1% in April 2020 to 12.7% in April 2021. This is the highest percentage on record since 2002.
Auto sales fell again in June, the second consecutive month in auto sales. And rising prices and scarcity scare off potential buyers.
Finding a vehicle in the correct configuration can take a while due to limited inventory these days. It’s also a good idea to have spare colors. You can also consider a number of different brands and models for maximum flexibility. You can give the market time to cool down.
What if you want to drive a new car now?
You might want to consider new vehicle lease deals and use your new car right now. With Grand Prix Motors, you get the opportunity to get a new car with the latest features. Plus, you get a manufacturer’s warranty to keep you safe from unexpected problems. The monthly payments for leasing are lower compared to other ways of financing with higher interest rates. In times of market crisis, there is always an opportunity. And now this opportunity is short-term commitment on your terms with leasing.