In the near future, even used car prices can go up due to the semiconductor shortage. So, if you’re planning to get one, this might be a great time to check used car inventories.
For months now, there has been a shortage of semiconductor chip production. As a result, the shortage forces car manufacturers to limit some of their models’ availability for a while. In fact, other automakers need to pull back production on some models. Since the production of new cars is less than average, dealerships are forced to mark up their vehicles, even the used cars. This trend may continue until the production catches up again. For now, car buyers and dealers may need to look for other vehicle sources to buy.
What Caused The Semiconductor Shortage? Your Guess Is As Good As Ours
From Europe to the USA and Japan, the chip shortage is hitting the automotive industry, which may cause dealerships to make their used car prices go up. What caused the shortage? The answer is straightforward, the pandemic. Since the global health problem started, it hit the car industry massively. It didn’t just plummet car sales, but the pandemic also leaves a very deep dent on other facets of the industry, including the following.
Not all car manufacturers got lucky during the pandemic. Some of them had no choice but to close down their operations as they couldn’t sustain production during the crisis. For the lucky ones, however, they may still need to close down some of their operations. According to analysts, most car factories have 20% more capacity than they need to produce vehicles. Since the pandemic happened, these unused factories had to go.
This effect of the semiconductor shortage hit hard, especially to those small manufacturers based in Europe. Smaller car makers tend to profit more diminutive than the more established ones, so most of them had to close their doors. But the problem doesn’t stop there, as they also need to face the political aspect of the problem. They have to face their laid-off employees’ objections, which may demand reinstating their jobs or provide their benefits.
New And Used Car Prices Go Up
As this is the topic of this post, it shouldn’t be a surprise by now that the fear of new and used car prices going up is there. Let us explain it a little bit more. The semiconductor shortage crisis hits the auto industry hard because most car productions rely heavily on technology. Carmakers need chips for these car features to work from the safety features down to the infotainment system. Without these semiconductor chips, factories have no choice but to put a halt to their production.
What’s The Plan?
Fortunately, semiconductor chip suppliers are already catching up. The only problem lying ahead is time – when will they catch up? It may take a while. Reports stated that chip giant Intel plans to shell out $20 billion to produce more chips. The money will be sent to their two plants in Arizona. But this doesn’t mean that they can now make enough semiconductor chips to supply all car manufacturers in just a week.
Don’t wait for the semiconductor shortage’s effects to fully creep in and create problems. If you’re really planning to get a used car anytime soon, you need to move now. The good thing is that you can now shop for vehicles online – but don’t just settle for any cars for sale online. Go to a legit used car inventory that provides individual vehicle condition report with every vehicle for sale.