Supply chain issues mean buying a car sometimes takes a plane ride
When Rachael Kasper started buying a new car in August, she had set her sights on a Ford Escape plug-in hybrid. The problem was, Ford didn’t make a lot of them this year due to a shortage of computer chips that slowed down car production around the world.
Ms. Kasper first arrived empty in her home state of Michigan and later in neighboring states. When she got down on the east coast, she found one – at a dealership 537 miles away in Hanover, Pa.
“I flew to Baltimore, took a Lyft to the dealership, then drove all the way home,” said Ms. Kasper, who owns a sports equipment retailer. nautical. “It was quite an adventure.
The shortage of computer chips, largely caused by decisions made at the start of the pandemic, has trickled down to the auto industry this year. Manufacturers have had to shut down factories for lack of spare parts, leaving car dealerships with millions of fewer vehicles to sell.
As a result, car buyers had to travel hundreds of miles to find the vehicles they wanted, forgo the haggling and accept higher prices, and even purchase used cars that were repaired after serious accidents.
The squeeze in supply coincides with an apparent increase in demand. Some people try to avoid public transport or taxis. Others just want a vehicle. Many families have saved thousands of dollars in part because of government benefits and stimulus payments and because they spent less on travel, dining and other luxuries that were abandoned due to health concerns.
The end of the year is normally a peak selling season, with some automakers running advertisements in which the cars are presented as giveaways with giant bows. But this year, consumers are finding that locating the car they want isn’t quick, easy or cheap.
As Ed Matovcik, an executive in the wine industry in Napa, Calif., Neared the end of his lease on a Tesla Model S, he decided to switch to a Porsche Taycan, a German electric car. He’s ordered one, but it won’t arrive until May, three months after he had to ditch the Tesla.
He plans to rent cars until the Taycan arrives and looks on the bright side. “It’s a different world now, so I don’t really mind the wait,” he said. “I’m thinking of renting a pickup for a week so I can finally empty my garage.”
The disruption of auto production has spread throughout the automotive world. For a while in the spring and summer of 2020, car rental companies stopped buying new cars and sold many of their vehicles to survive when travel was restricted. Today, these companies are looking to take advantage of a booming rental market and are scrambling to buy cars, often in competition with consumers and dealers.
The big discounts and incentives that were once standard features of buying cars in the United States have all but disappeared. Instead, some dealers are now adding an additional $ 2,000 or $ 3,000 to the list price of new cars. This has left car buyers furious, but the dealers who raise the prices know that if one customer balks, another usually waits and is ready.
In November, the average price for a new car was a record $ 45,872, down from $ 39,984 a year ago, according to Edmunds, an auto data provider. The average price paid for a used car is now over $ 29,000, down from $ 22,679 in 2020, and Edmunds expects it to exceed $ 30,000 next year for the very first time.
With the rise in used car prices, some consumers are spending to repair older vehicles and keep them longer. More and more cars damaged in accidents are being repaired instead of being declared a total loss by insurers and sent to be scrapped.
“The math has changed for whether a car is totaled,” said Peter DeLongchamps, senior vice president of Group 1 Automotive, a Houston-based auto retailer that operates its own chain of body shops. “Our parts and service business is very good. We are seeing more and more cars being repaired based on high usage values. “
The auto industry‘s chip shortage stems from the onset of the pandemic in the spring of 2020, when automakers shut factories for weeks and cut orders for computer chips and other parts. At the same time, homebound consumers were buying laptops, game consoles and other electronics, prompting manufacturers of these devices to increase orders for semiconductors. When automakers resumed production, they discovered that chip vendors had less production capacity for them.
As a result, automakers produced far fewer trucks and cars this year than they expected. In addition to shutting down factories, they built vehicles without certain features, such as heated seats and electronic components that maximize fuel economy. Tesla ditched the electric lumbar support in the passenger seat of some models.
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Declining production has limited sales of new vehicles this year. Edmunds expects the industry to sell around 15 million light trucks and cars, well below the 17 million that were considered a benchmark in the years leading up to the pandemic. He expects a modest increase in 2022, to 15.2 million vehicles.
Automakers have said chip supply has improved in recent months, but executives expect components to remain a problem for much of next year.
Some automakers are testing new strategies to ensure a constant supply of chips in the future. Ford Motor recently said it was working with GlobalFoundries, which operates semiconductor factories, to develop chips specifically for Ford vehicles, and that it is looking for ways to increase chip production in the United States.
General Motors is working with chipmakers to develop three core chips that can meet most of its needs. The company expects this strategy to increase supply while significantly reducing costs.
“We see the chip problem continuing through 22,” Ford chief financial officer John Lawler told analysts on a conference call in October. “We’re doing everything we can to get our hands on as many chips as possible.”
This means that consumers will pay top dollar for new cars and shop everywhere.
For some potential car buyers, however, the market is just too rich.
Tom Maletic, retired medical sales manager in New Orleans, recently started buying a two- or three-year-old Ford EcoSport, a small sport utility vehicle. He had hoped to find one with less than 20,000 miles priced at around $ 15,000, which he paid for an EcoSport for his wife earlier in the year. “But it was $ 17, 18, 19, 21,000,” he said. “And these were five, six, with a lot of miles to go.”
In the end, he flew to Michigan to pick up a 2015 Ford Escape he had passed on to his son and drove it 1,100 miles to New Orleans.