The United States and many regions worldwide are experiencing a significant car shortage as of 2021-2022. This shortage is due to the lack in semiconductors chip supply. It is unclear when this car shortage will end, but experts expect it will last for at least the next year, if not longer.
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Over the years, many Americans moved from city to suburbs and purchased more vehicles than before. That’s why tons of vehicles are sold and purchased every year around all cities of the United States.
Unfortunately, you've heard about what's known as the car shortage very recently. You've probably heard that it's linked to the chip shortage that resulted in some grocery and toy industries issues.
That's why many of our readers reached out to us, wondering why there is a car shortage and why are there no cars at dealerships? Others also asked about a potential end for this car shortage and experts’ expectations about the change in the car shortage trend across 2022 and potentially 2023.
This article provides an overview of the whole story behind car shortage, including all previous causes and a potential timeline for an end to this shortage.
What is the chip shortage, and how is it linked to car shortage?
Before we dig into the details about car shortage in 2021-2022, let's step back and get an idea about the real cause behind all of this.
If you've never heard about the chip shortage, then this should be the best time to learn about it. According to experts, there is a significant shortage in what's known as integrated chips or semiconductor chips because of the pandemic and other related reasons.
This short-end chip production impacts 169 industries, including cars and automobiles. Every car requires somewhere between 1400 and 1500 if not 3000 chips to get produced. So with a significant reduction in chip production, car production got impacted significantly. That's why I, you might get into leadership and ask yourself, “why are there no cars at dealerships?”
Unsurprisingly, with the short production of chips, a significant increase in spikes in used car prices was noticed because many people are holding on to their vehicles because they can't afford to purchase a very expensive one. However, other people found it perfect for selling their extra cars and making money, especially those who have junk vehicles.
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How will chip shortage impact Car production and used car prices?
According to recent publications in the Washington Post, the United States will produce 1,000,000 fewer vehicles than before because of the issue caused by the chip shortage.
This reduction in vehicle production will significantly impact the current prices of used vehicles. This increase in used car prices has been noticed over the last couple of months as some dealerships indicated purchasing used vehicles for 27% higher prices than usual.
Why are drivers hanging on their vehicles longer?
While the chip shortage is the main reason people hang on their vehicles much longer, other factors impact the spike and significant increase in used car prices, including climate change.
You've already heard about what happened to multiple cities in the United States where tons of vehicles were flooded and increased the pressure on vehicle supply. Therefore, it is not surprising to ask yourself why there are no cars at the dealerships?
With the increase in used car prices for this variety of reasons, drivers decided to hold on their cars and never sell them because they probably can't afford the hot increasing the used and new car prices. Therefore, if a driver will sell his vehicle if it has minor issues, now drivers are looking for finding solutions to fix their current vehicles and have them serve them as longest possible, so they don't need to purchase newer vehicles.
Are there specific vehicle brands impacted mostly by the car shortage?
Yes. Some trends were reported by experts at Consumer Reports indicating that certain automakers are experiencing more issues than others in terms of car shortage. Experts indicated, “The car shortage isn’t affecting every model the same way so that consumers can take advantage of the forgotten corners of the auto market. Now more than ever, it pays to do a lot of research before you commit to anything.”
Let's look at some of the most impacted automakers by the car shortage:
1- Honda and Acura
According to recent articles, the executive vice president of American Honda indicated that “We appreciate the patience of our customers as our associates, our suppliers, and our dealers continue working to supply Honda and Acura products to meet their needs.” This clearly shows that there is a real issue in terms of producing new vehicles from Honda and Acura.
2- Audi
At Audi, on the other hand, you might notice a shortage in certain models than others. For example, there has been noticed a significant reduction in the supply of Q8 and Q7 models. The company was impacted by the chip shortage and indicated that a combination of factors impacted the company's production, especially those related to the chip shortage, pandemic, and climate change issues. According to a recent article, the CEO of Audi mentioned, “We had a very strong first half in 2021. However, we do expect a much weaker second half. We have trouble.”
3- Mini and BMW
Many vehicles at BMW and mini got impacted by the production, and in fact, there has been a short pause in producing some vehicles, including the hybrid X1 and X2.
4- Buick
Buick vehicles also showed a specific reduction in the supply, and some of the General Motors plants got shut down in certain areas around the United States.
5- Cadillac
Unfortunately, many Cadillac plants got shut down, and the shutdown is still going in some areas because of the chip shortage. In addition, the plants shut down impacted certain model years than others, including the XT4, XT5, and XT6.
6- Toyota
Interestingly, a recent article published in the New York Times indicated that there had been a 15% reduction and Toyota production due to the chip shortage. So with that, many of Toyota's models got impacted, and some of the used car prices increased from the Toyota models.
7- Subaru
Several also faced some plants shut down, especially the one in Indiana, and this impacted many models, including the Outback, Impreza, legacy, and Ascent.
8- Nissan
In both October and November, Nissan cut production by 30% due to the improper supply of chips, which significantly impacted their 2022 model production.
9- Mitsubishi
A large number of plants faced shut down in a variety of countries around the world Fort Mitsubishi.
10- Mercedes-Benz
Not only the regular vehicles got impacted by the chip shortage but also many of the luxury cars. According to the CEO of Mercedes-Benz, “We hope to be able to stabilize the situation in the fourth quarter, and take that to the next level in 2022.”
If you're looking to purchase a new Mercedes-Benz, you might find it difficult to get the EQ C, GLC, and C Class models because they are very scarce. Thus, you might want to wait for a couple of years until those are available or until their price is reasonable.
11- Kia
Significant shortages and many shutdowns impacted Kia manufacturers, which impacted these productions of the Telluride model.
12- Jeep
Jeep Grand Cherokee models also got impacted by the chip’s shortage in many areas around the world.
13- Jaguar
The chip shortish impacted significant scarcity in the Jaguar, Land Rover, and Range Rover vehicles. More specifically, you'll find it hard to purchase a vehicle from the F, XY, and XF models.
14- Hyundai
The chip shortage also impacted many Hyundai vehicles.
15- GMC
GMC also reported experiencing a significant production reduction in many of its models due to the chip shortage.
16- Ford
Some vehicles from Ford got impacted by the chip shortage, including the explorer, F150, and Ford Mustang.
17- Dodge
Many layoffs were reported about dodge manufacturers due to the chip shortage, and that's why the production and distribution were also impacted.
18- Chevrolet
If you're looking to purchase 8 Chevrolet Camaro, Equinox, Blazers, or Chevrolet Malibu, you might want to change your mind because those are also not available as much unless you're lucky and would like to pay a lot.
Will the car shortage be in soon?
Unfortunately, there is no clear-cut date when we expect the car shortage ends. This is because it depends heavily on the production of the semiconductor chips, which also is unknown.
Experts are still concerned about the car shortage to continue for the next year, if not longer. According to automotive experts at Consumer Reports, “It’s likely that car buyers will be paying more for new vehicles, at least through the next year and perhaps longer. This is because most automakers face production cuts, which means a limited inventory of new products on dealer lots. Low inventory means reduced or nonexistent discounts and deals on new vehicles.”
Should I hold on to Buying a new car during the car shortage?
Surprisingly, many experts indicated that it's not the best time to stay idle and wait on purchasing a new car. This is because if you need a new vehicle, it might be now the best time to buy it. After all, things are not expected soon and probably the car prices will increase.
However, you must perform all necessary research to get an idea about where to get the best vehicle and how to save as much as possible on money.
Note that if you don't need a car now, it might be better to hold on and wait before you purchase a vehicle.
In other words, it will be your own decision to determine whether it's a real necessity to purchase a new car now or not.
Conclusion
Since the reduction and chip production, there has been a significant car shortage in the US market worldwide. The cardboard impacted certain brands more than others, but the overall industry is impacted.
This article provides you with an overview of all you need to know regarding the chip shortage, the car shortage, and how this impacted the brand will and used car prices. It also helps you determine whether it's nighttime now to purchase a new car or not.
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