Chip Shortage Continues to Impact Auto Industry
Auto manufacturers can’t keep up with the demand for cars. Across the country, Americans are buying cars just as fast, if not faster, than they are being made or resold. Used car prices are surging and car companies don’t see the issue going away any time soon.
Two days ago, Daimler said it expects the global shortage of semiconductor chips to impact car sales in the second half of 2021 as well as in 2022. At the same time, General Motors announced it would pause most of its pickup production in North America, less than a week after it said it would do the same for midsize SUVs at four of its plants.
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Four days ago, Ford floated the idea of selling unchipped vehicles to dealers at some point in 2021 — vehicles that the dealers couldn’t sell immediately but that would at the very least fill up lots that are looking barer and barer each passing day. Toyota also suspended vehicle production at three plants in Thailand this week because of a parts shortage.
It’s not just a question of supply. Thanks to low interest rates, government stimulus payments, and the general recovery of the economy amid the ongoing COVID-19 pandemic, demand has also risen, putting even more pressure on manufacturers worldwide.
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The semiconductor shortage is affecting more than just the auto industry, as anyone who has tried to get their hands on a new graphics card or gaming console probably knows already. But there is a silver lining for at least one category of people on the car market: lessees.
Used car prices are up 45 percent according to government data published this week and dealerships are paying top dollar for trade-ins. If your lease term is ending soon, you may be able to use the current exceptional market circumstances to net yourself a tidy sum in equity.
Kurt Verlin was born in France and lives in the United States. Throughout his life he was always told French was the language of romance, but it was English he fell in love with. He likes cats, music, cars, 30 Rock, Formula 1, and pretending to be a race car driver in simulators; but most of all, he just likes to write about it all. See more articles by Kurt.