Nashville-Davidson, Tennessee 2021-09-05 19:09:43 –
Toledo, Ohio (AP) — Back in the spring, it seemed that the shortage of computer chips that had been driving car prices was finally alleviated. It seems that some relief for consumers has begun to appear.
That hope is now dim. The surge in COVID-19 cases from delta variants in some Asian countries, the main producers of autograde chips, exacerbates supply shortages. It also delays the return to normal car production and artificially keeps the supply of vehicles low.
So, according to analysts, record high consumer prices for new, used and car rentals will continue until next year and may not fall to Earth until 2023.
Computer chips are not the only global shortage of parts. Automakers are also beginning to notice a shortage of wire harnesses, plastics and glass. In addition to automobiles, demand is outpacing supply in the face of the resurgence of the virus, packing key components of products from agricultural and industrial machinery to sportswear and kitchen accessories into ports around the world. I am.
Glenn Mears, who runs four car dealerships around Canton, Ohio, said:
Suffering from a shortage of parts, General Motors and Ford have announced the closure of several plants in North America for a week or two. Some of them produce very popular full size pickup trucks.
At the end of last month, a serious shortage of semiconductors and other parts forced Toyota to announce a production cut of at least 40% in two months in Japan and North America. The reduction meant a reduction of 360,000 vehicles worldwide in September. Toyota, which has largely avoided the sporadic factory closures that have plagued its rivals this year, expects production losses by October.
Nissan, which announced in mid-August that it would close its huge plant in Smyrna, Tennessee until August 30 due to a chip shortage, now says the closure will continue until September 13.
And Honda dealers are preparing for fewer shipments.
“This is a fluid situation affecting the global supply chain across the industry and we are adjusting production as needed,” said Honda spokesman Chris Abbruzzese. ..
As a result, car buyers are facing unprecedented price hikes. JD Power estimates that the average price of new cars sold in the United States in August was just over $ 41,000, nearly $ 8,200 higher than it was two years ago.
Consumer demand remains high, and automakers feel little pressure to seek discounts on cars. Forced to save on scarce computer chips, automakers routed them to higher-priced models (such as pickup trucks and large SUVs), thereby pushing up average prices.
The roots of computer chip shortages that plague the automotive and other industries stemmed from the pandemic eruption earlier last year. US car makers had to shut down their factories for eight weeks to prevent the spread of the virus. Some parts companies have canceled their semiconductor orders. At the same time, tens of millions of people rushed home and demand for laptops, tablets and game consoles skyrocketed.
Consumer demand for cars remained strong as car production resumed. However, chip makers have shifted production to consumer goods, and there has been a shortage of weatherable automotive-grade chips.
Then, in the same way that car chip production began to recover at the end of spring, a highly contagious delta variant struck Malaysia and other Asian countries, completing chips and manufacturing other car parts. ..
New car sales in the US in August fell by nearly 18%, primarily due to supply shortages. Automakers reported that US dealers had less than a million new cars in their lots in August — 72% less than in August 2019.
Consulting firm Alix could achieve a more normal 60-day car supply and lower prices, even if car production could somehow quickly regain the highest level of cars sold in the United States. It will take more than a year. Calculated by the partner.
“In that scenario, it’s not until early 2023 that we’ll be able to overcome the sales backlog, expected demand, and increase inventory,” said Dan Hearsch, managing director of AlixPartners. increase.
So far, many dealers are almost out of new cars due to a shortage of parts supply and widespread production cuts.
When I recently visited the Central Avenue Strip on the outskirts of Toledo, Ohio, I couldn’t find a lot of new cars on a busy road with dealers. Some dealers filled their lots with used cars.
Heather Piperow of Adrian, Michigan, said he didn’t even look for a new SUV at Jim White Honda because of the very low supply and very high prices.
“That’s more than I paid for my house,” she said mercilessly.
Ed Ewers in Mansfield, Ohio traveled to a Subaru dealership in the Toledo area for about two hours to buy a second-hand 4-door Jeep Wrangler made in 2020. He considered buying a new one, but decided that a used car would be more in his price range to replace the aging Dodge Journey SUV.
Honda dealers are running out of new inventories, said Mears, who has managed to survive because consumers have to pay a lot for both new and used cars.
He said he wouldn’t charge more than the price of the sticker — enough profit to cover the expenses and make money. You also don’t have to advertise a lot of vehicles or pay interest. He said many vehicles were sold before they arrived from the factory.
Tip orders made nine months ago are now starting to arrive. But other components, such as parts made from glass and plastic injection molds, have been exhausted, Hirsch said. Due to the virus and general labor shortages, auto parts makers may not be able to make up for lost production, he said.
The tentative cause of hope is beginning to become apparent. Siew Hai Wong, chairman of the Malaysian Semiconductor Industry Association, said he hopes that chip production will begin to return to normal in the fall as more workers are vaccinated.
Malaysia, Vietnam, Taiwan, Singapore and the United States all produce semiconductors, but a shortage of one chip could disrupt production, he said.
“If there is turmoil in Malaysia, there will be turmoil somewhere in the world,” Wong said.
Automakers are considering moving to an order-based distribution system rather than maintaining a large supply of dealer lots. But no one knows if such a system will prove to be more efficient.
Eventually, Hearsch suggested that the delta variant should pass and the supply chain should return to normal. By then, automakers are predicting that they will line up multiple component sources and stock critical components.
Professor Ravi Anupindi of the University of Michigan, who studies the supply chain, said:
Until 2023? Parts shortage will keep auto prices sky-high Source link Until 2023? Parts shortage will keep auto prices sky-high