The Chip Shortage May Affect New Cars Until 2023
Find out if you’re getting ripped off on your car insurance in less than two minutes.
No long forms · No spam · No fees
Many car buyers have been frustrated by the global chip shortage, which is forcing some companies to change their strategies and decreasing the inventory of new cars.
But unfortunately, the chip shortage may not end anytime soon.
According to CBS News, it recently seemed like the shortage might be coming to an end. But now, an increase in COVID-19 cases with the rise of the Delta variant in some Asian countries is making the shortage supply even worse. This is reportedly delaying the return to normal car production, and keeping the supply of vehicles low.
New cars and more have been affected by the shortage
With the ongoing chip shortage, analysts now say the high consumer prices of new, used and rental cars will most likely extend into next year, and may not return to normal until 2023.
According to Bloomberg, Rohm Co., a Japanese company that makes semiconductors for cars and industrial machinery, says that the semiconductors will likely remain in short supply at least throughout 2022.
Motor1 reports that although it’s estimated it will take the industry another 15 to 20 months until the global chip shortage is resolved, the impact on vehicle production should be less severe next year—so it seems there is at least some good news.
Soaring prices, decreased new car sales
Car prices hit an all-time high in July 2021, according to Kelley Blue Book. In fact, KBB reports that the average new-vehicle transaction prices hit a record $42,736 that month.
As CBS News reports, sales of new cars has also been decreasing with the low inventory of vehicles. In August, new car sales decreased nearly 18% and is mostly blamed in supply shortages.
In fact, the computer chips aren’t the only auto component in short supply. Automakers are also reportedly seeing shortages of wiring harnesses, plastics, and glass.
Companies have closed plants and halted new car production
The global chip shortage has also affected car production, forcing some automakers to cut back or even close some of their plants.
Earlier this year, Toyota announced it would be cutting global production by 40% beginning in September due to the chip shortage and other unexpected events that have affected the supply chain.
Some of Toyota’s North American facilities started cutting production in August, building between 140,000 and 170,000 fewer vehicles in the two months.
Other car companies have announced delays in certain models due to the chip shortage. For instance, Ford recently said it would temporarily close its Michigan Assembly Plant to enable inventory to catch up and had to halt production of the Ford Ranger Pickup and Ford Bronco SUV, and GM was forced to halt production of Chevy Silverado and GMC Sierra in Indiana.
Volkswagen even had to sell some cars without infotainment systems as a result of the shortage.
With the chip shortage still ongoing, it wouldn’t be surprising if we see more car companies making production changes soon.
Save with Jerry
It looks like buying a new car might be more expensive for a while. If you want to save money on car insurance, Jerry can help. The app compares rates from name-brand companies to get you the coverage you need at the best price.