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Latest New Car Chip Shortage Updates March 25, 2022
carsdirect.com ^ | March 25, 2022 | Alex Bernstein,

Posted on 05/26/2022 5:48:59 PM PDT by dennisw

A chip shortage has had a profound impact on the ability to buy a car. Supply chain problems have forced automakers to stop or limit the production of new cars, trucks, and SUVs. Together with disruptions due to the coronavirus pandemic, the price you pay and the deal you get could be very different from what you expect.

We'll cover the causes of the chip shortage, how long it could last, and what it means for new car buyers. This page will be updated as new information becomes available, so make this your home base for key information to help you better understand market conditions and, most importantly, how to get the best deal.

Why is there a chip shortage? Auto manufacturers canceled semiconductor orders in the early stages of the coronavirus pandemic. Once the economy started to improve, getting access to those materials proved exceedingly difficult because they were already allocated to consumer electronics by overseas chip suppliers.

When will the chip shortage end? Analysts predict inventory may not return to pre-pandemic levels until 2023. Many chip suppliers are located abroad, and it hasn't been easy for the U.S. to build more semiconductors domestically. While there are efforts by the government to get this to happen, it will take time.

On January 25th, 2022, the U.S. Commerce Department reported that median inventory for semiconductor chips had fallen to just a 5 days' supply, compared to 40 days before the pandemic. Major semiconductor companies don't expect the situation to go away within the next 6 months.

On February 4th, the U.S. House of Representatives passed the America Competes Act of 2022 with $52 billion to subsidize chip manufacture and research and $45 billion to help ease supply chain problems. The bill will need to be approved in the Senate before it can be signed into law.

On February 14th, Toyota announced it would cut March car production by up to 200,000 vehicles globally due to supply chain issues. This may affect models like the Lexus NX, Toyota C-HR, and more. Other disruptions included a Canadian trucker protest and a major earthquake in Japan.

Some manufacturers have taken the opportunity to make significant changes. For example, Ford is limiting the number of vehicle configurations stocked by dealers by up to 80%, which may get more buyers to place an order. Honda is looking to normalize lower inventory levels to reduce overhead and increase dealer profits.

What does the chip shortage mean? With the inventory shortage making it harder to find vehicles, new car prices remain high and buyers have less negotiating power than in the past. While there can be ways to avoid a dealer markup, some buyers have resorted to ordering cars in transit or even delaying their purchase.

Dealers may be selling fewer cars, but are also seeing record profits. A shortage of new cars also boosted demand for preowned vehicles. This caused used car prices to rise by over 40%, creating opportunities for some buyers to benefit from high trade-in values. Some brands began limiting lease buyout options as a result.

Without required semiconductors, automakers have been unable to complete the manufacturing of their cars. For example, GM limited the availability of its Super Cruise driver assistance technology and even began selling incomplete vehicles with a number of missing features that would've been standard equipment.

In the above photo taken of a 2022 Chevy Tahoe High Country window sticker, you can see the automaker is crediting buyers a total of $100 because the $80,000 SUV wasn't built with an engine with automatic stop/start and lacks a steering column lock. The lack of stop/start could hurt a driver's fuel economy for years.

More recently, Ford confirmed it will begin selling incomplete vehicles provided they are safe to drive. Affected vehicles will be missing certain chips that will need to be installed later by a dealer. Globally, almost 1.2 million vehicles have been cut from production, according to the industry publication Automotive News.

Here are some other noteworthy examples of how the chip shortage has impacted certain cars since the problems began:

Some Genesis models lost driver-assist safety features Ford began selling driveable cars without chips Tesla raised prices in March 2022 by up to $10,000 Ford added a raw materials surcharge on some fleet vehicles Ford Mustang Mach-E orders were delayed

Toyota Tacomas started coming with only one keyless remote Buick Encores dropped the entry-level 1.2L engine Ford shipped thousands of F-150s with missing chips Ford offered to remove stop-start on F-150s to speed delivery GM paused building Silverado trucks with cylinder deactivation Toyota stopped advertising lease deals in some regions What are car prices like during the chip shortage? Based on data from Kelley Blue Book, new car buyers have been paying over MSRP for well over 6 months. While the figure does not factor in factory rebate deals, it does indicate that new car buyers should expect to pay MSRP or above MSRP until conditions improve.

The average transaction price of a new car in January 2022 was over $47,000. New vehicle prices were already trending higher due to a shift toward SUVs and expensive trucks, but the chip shortage has only made things worse. While there are still cheap cars you can buy in 2022, there are definitely fewer choices.

Paying MSRP could make sense if you aren't able to wait. After all, real-world car prices are dictated by supply & demand. Although manufacturer incentives are down overall, there can still be opportunities to save whether it's with great lease deals or available 0% financing promotions amid the car shortage.

In the preowned market, the average used car price in January 2022 exceeded $28,000 based on data from Cox Automotive. Used cars under $10,000 have been the hardest to find, affecting price-sensitive buyers. While CPO cars can be a good deal for some buyers, they are generally more expensive than non-certified cars.

What cars are hardest to find during the chip shortage? Import brands have been the hardest to find. According to Cox Automotive, Kia and Honda tied late last year for the worst inventory at a 17 days' supply, versus the industry average of 33. Toyota and Subaru followed with a 19 and 20 days' supply, respectively.

Having said that, brands with higher days' supply numbers may not always be easier to find. For example, GM has more inventory than Toyota, but trucks like the GMC Sierra are offered in many types of configurations. As a result, getting the exact truck you want could require you to wait or place an order with a dealer.

What cars are easiest to find during the chip shortage? Based on days' supply, Chrysler has had the most inventory at 98 days based on data from late last year. However, given the fact that the brand sells just two main models at this point — the Chrysler 300 and Pacifica minivan — these may not be so easy to find.


TOPICS: Business/Economy; Computers/Internet
KEYWORDS: chipshortage

1 posted on 05/26/2022 5:48:59 PM PDT by dennisw
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To: dennisw

The lack of stop/start could hurt a driver’s fuel economy for years.


And extend the life of the starter.


2 posted on 05/26/2022 5:57:21 PM PDT by DuncanWaring (The Lord uses the good ones; the bad ones use the Lord.)
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To: dennisw

I don’t believe this.

I haven’t heard of one auto factory being shut down.


3 posted on 05/26/2022 6:03:54 PM PDT by blueunicorn6 ("A crack shot and a good dancer”)
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To: DuncanWaring
And extend the life of the starter.

And decrease your chance of getting stranded at a random red light with a weak battery.

4 posted on 05/26/2022 6:11:20 PM PDT by PAR35
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To: DuncanWaring

I turned that dumbassed “feature” OFF, right away.


5 posted on 05/26/2022 6:43:10 PM PDT by Carriage Hill (A society grows great when old men plant trees, in whose shade they know they will never sit.)
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To: carriage_hill

Were you able to turn it off permanently? It’s the first thing I do when starting my new car. But, sometimes, I forget it.


6 posted on 05/26/2022 6:48:05 PM PDT by Jet Jaguar
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To: dennisw

bkmk


7 posted on 05/26/2022 7:49:25 PM PDT by sbnsd
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To: carriage_hill

We actually disconnected the auxiliary battery in our Chrysler Pacifica because we were sick of stop-start. We recently rented a GM Terrain for a trip, and it had NO defeat for the stop-start system. Very annoying, and total BS about improving gas mileage. It’s carmakers attempting to scam the EPA.


8 posted on 05/26/2022 8:12:59 PM PDT by FlatulusMaximus
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To: Jet Jaguar

Yes. I have a 2019 Jeep Grand Cherokee HEMI V8, and it’s easily done. In the dash’s control panel, under ‘settings’, there’s a line item for ‘engine settings’, and the on-off crap is easily disabled. It doesn’r reset itself unless I set that option.


9 posted on 05/26/2022 8:34:24 PM PDT by Carriage Hill (A society grows great when old men plant trees, in whose shade they know they will never sit.)
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To: FlatulusMaximus

It’s a totally worthless setting/option.


10 posted on 05/26/2022 8:35:58 PM PDT by Carriage Hill (A society grows great when old men plant trees, in whose shade they know they will never sit.)
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To: carriage_hill

Thanks. I will see if my Volvo has that option.


11 posted on 05/27/2022 4:56:40 AM PDT by Jet Jaguar
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To: FlatulusMaximus

If you have an in-dash info-tainment screen, there should be a way to access ‘settings’, and get to the menu line item to disable it. I don’t know what yours would be listed under, but probably the ‘driving’ category. At least I’d think so... but one never knows.


12 posted on 05/27/2022 5:59:59 AM PDT by Carriage Hill (A society grows great when old men plant trees, in whose shade they know they will never sit.)
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To: dennisw

No more cars for you!


13 posted on 05/27/2022 6:03:06 AM PDT by 9YearLurker
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To: dennisw

Ping


14 posted on 05/27/2022 6:30:58 AM PDT by dennisw
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To: dennisw

.


15 posted on 05/28/2022 8:45:45 AM PDT by sauropod ("We put all our politicians in prison as soon as they are elected. Don’t you?" Why? "It saves time.”)
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