Connect with us

Hi, what are you looking for?

Business

No relief in sight for global parts shortage until 2023

Vehicles for sale at Lawrence's Holden - the local Holden dealership in the regional Queensland city of Rockhampton. in 2020. Source - RegionalQueenslander, CC SA 4.0.
Vehicles for sale at Lawrence's Holden - the local Holden dealership in the regional Queensland city of Rockhampton. in 2020. Source - RegionalQueenslander, CC SA 4.0.

Earlier this year, the computer chip shortage that had sent auto prices soaring seemed on the verge of easing, that is, until a surge in COVID-19 cases from the delta variant in a number of Asian countries that make the chips.

With employees out sick with the virus, chip producers have been unable to return to normal production levels, which hampers normal auto production and keeps the supply of vehicles artificially low.

And according to CTV News Canada, analysts are saying that record-high consumer prices for vehicles — new and used, as well as rental cars — will extend into next year and might not fall back toward earth until 2023.

The global automotive industry is not just seeing shortages of computer chips. There are also shortages of wiring harnesses, plastics, and glass, too. And beyond autos, vital components for goods ranging from farm equipment and industrial machinery to sportswear and kitchen accessories are also bottled up at ports around the world as demand exceeds supply.

“It appears it’s going to get a little tougher before it gets easier,” said Glenn Mears, who runs four auto dealerships around Canton, Ohio, reports the Associated Press.

The chips are down: why there's a semiconductor shortage
Thousands of unfinished cars are seen parked at a Volkswagen factory in Pamplona, Spain, in May due to the lack of semiconductor supplies – Copyright AFP ANDER GILLENEA

Just last week, General Motors and Ford Motor Company announced production cuts at their plants in North America because of the global semiconductor shortage, according to Digital Journal.

Nissan, which had announced in mid-August that chip shortages would force it to close its immense factory in Smyrna, Tennessee, until Aug. 30, now says the closure will last until Sept. 13.

Honda dealers are bracing for fewer shipments, while Toyota, which has managed to avoid production cuts this past year, announced production cuts in Japan and North America that could last into October.

The end result of the supply shortage will mean new vehicle prices are going to be much higher than expected. The average price of a new vehicle sold in the U.S. in August hit a record of just above $41,000, nearly $8,200 more than it was just two years ago, according to J.D. Power estimates.

To make matters worse, U.S. dealers had fewer than 1 million new vehicles on their lots in August – 72 percent less than in 2019. “Under that scenario,” said Dan Hearsch, an Alix Partners managing director, “it’s not until early 2023 before they even could overcome a backlog of sales, expected demand, and build up the inventory.”

Avatar photo
Written By

We are deeply saddened to announce the passing of our dear friend Karen Graham, who served as Editor-at-Large at Digital Journal. She was 78 years old. Karen's view of what is happening in our world was colored by her love of history and how the past influences events taking place today. Her belief in humankind's part in the care of the planet and our environment has led her to focus on the need for action in dealing with climate change. It was said by Geoffrey C. Ward, "Journalism is merely history's first draft." Everyone who writes about what is happening today is indeed, writing a small part of our history.

You may also like:

World

Calling for urgent action is the international medical humanitarian organization Doctors Without Borders/Médecins Sans Frontières (MSF)

World

Immigration is a symptom of a much deeper worldwide problem.

Business

Saudi Aramco President & CEO Amin Nasser speaks during the CERAWeek oil summit in Houston, Texas - Copyright AFP Mark FelixPointing to the still...

Business

A recent article in the Wall Street Journal infers that some workers might be falling out of the job market altogether.