After a decade of record-low new-car affordability and drive-away deals, prices continue to rise or remain steady as global vehicle production remains strangled by a worldwide shortage of microchips.
As reported earlier by CarAdvice, the semiconductor shortage has been largely driven by an unexpected surge in demand for new cars in the wake of the coronavirus crisis – and a decision by the electronics industry to pivot to smartphones and other devices to keep their factories running.
New-car dealers in Australia canvassed by CarAdvice say they don't see stock supply returning to normal until the second half of 2021.
“The two biggest sales months of the year are coming up – March and June – and we won't have enough stock to cover us through that period, so I don't think we will see free supply or over-supply until the end of the year,” said one multi-franchise car dealer speaking on condition of anonymity.
Most new cars use between 50 to 200 individual chips, while hybrid and electric cars can require up to 3500 chips.
While the waiting time for certain in-demand new cars – such as these examples listed here – stretches from six to 12 months, most mainstream models still have delays ranging from a few weeks to a few months.
A report overnight by US industry journal Automotive News USA said the global shortage of microchips “continued to bring down vehicle assembly lines last week, even as industry leaders worked to restore sales volumes derailed by the coronavirus pandemic”.
The news outlet said the shortage was “widely believed to be caused by sudden competition for chip production capacity as auto sales resurged last year” and now “threatens to slow the (automotive) industry’s recovery”.
Automotive News USA reported one of the biggest-selling vehicles on the planet – the Ford F-150 pick-up – also had to scale back production due to restrictions on parts supply.
But that was just one example, with car makers around the world reporting similar constraints. Indeed, the Volkswagen Audi Group last week said it was considering legal action against one of its suppliers.
“The effect of (the microchip shortage) is spreading farther and faster than a lot of companies were letting on initially,” Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, told Automotive News USA.
The expert said the electronics industry did not anticipate a quick recovery in the automotive industry after COVID-19.
“When you have a large demand for your chips in so many different industries, you have to prepare ahead of time for where are buyers going to be,” Fiorani was quoted as saying in Automotive News USA.
“People will buy a phone or video games before they buy a new car, so the chips went elsewhere, and when the economy bounced back quicker than expected and the automotive industry followed that, this was less expected than anyone really thought at the beginning.”