SHOPSMART AUTOS – CUSTOMER INFORMATION – JULY 31, 2021 (PT.2)
These components include features like navigation systems, which Nissan reportedly pulled from thousands of vehicles. GM has also taken the less-is-more approach to keeping production lines moving. First, the automaker reportedly removed an Active Fuel Management system from its full-size pickups, including the Chevrolet Silverado 1500 and GMC Sierra 1500, which resulted in a 1- or 2-mpg efficiency loss. GM also announced it would build some V-8 trucks and SUVs without an automatic stop-start feature. Although cutting features to keep vehicles in production offers some relief, it’s not a quick fix. GM still had to reduce production for the Silverado and Sierra along with the Chevy Equinox, GMC Terrain, Chevy Malibu and Cadillac XT4, according to an AutoForecast Solutions monthly report. Government Action President Biden got involved early in the chip shortage, recognizing the geopolitical nature of the crisis but more action is needed to resolve the situation, according to Jominy. “The chips are primarily produced in China, and it’s harder for the U.S. to get the chips in general,” Jominy said. “China shut down sooner and came back sooner, so they were able to get the chips earlier than other parts of the world. Also, a lot of chips come from Korea, so who doesn’t have someone in their corner? The U.S. domestics.” Indeed, a 2020 report by Boston Consulting Group and the Semiconductor Industry Association notes that the U.S. now accounts for just 12% of global semiconductor production, down from 37% in 1990. (Though the two aren’t quite synonymous, semiconductors are often referenced interchangeably with microchips in the current crisis.) As the first action step to address the shortage, the U.S. Senate passed a $190 billion legislation package to compete with Chinese tech, Reuters reports. According to the Congressional Budget Office, $54 billion will be allocated specifically to domestic production of semiconductor and telecommunications equipment, with $2 billion of that reserved for chips used by automakers. The bill still needs to pass the House of Representatives, where it reportedly faces a longer timeframe, but President Biden has voiced support to sign the bill into law. When Will Inventory Return to Normal? Brinley says we may never see inventory levels return to pre-COVID levels, but shoppers can expect to find more vehicles on dealer lots as the semiconductor situation improves. “Normal is also likely to change,” she said. “Automakers and dealers are working to adapt to a lower inventory level, as it has been an issue since mid-2020 for a number of reasons. However, relative to the semiconductor shortage, supply is expected to improve from mid-2021 forward and largely return to normal in the first quarter of 2022. Over the next eight months, the situation will gradually improve.” According to Fiorani, it won’t be until the third or fourth quarter of this year before the industry hits the trough of the inventory problem, and vehicle inventory likely won’t return to full capacity until 2022. When asked if the shortage could extend into 2023, Fiorani says there’s no way to know how long customers will have to wait. “The problem is we’re in uncharted territory, like COVID was a year ago,” he said. “We don’t really know how deep this is and how soon we’ll recover.” Jominy expects the chip shortage will last another four months in a worst-case scenario but cautions that the residual effects on vehicle inventory will be felt much longer due to high demand. He estimates that the trough of the inventory will be around Labor Day, since summertime is normally the biggest car-selling season, and it started with a shortage. He also says the recovery efforts won’t materialize as increased inventory until the second or third quarter of 2022, and it’s unlikely consumers will see the incentives and deals they are accustomed to until such increases occur. What If I Need to Buy a Car Before 2022? Patience and flexibility are virtues in the current car-shopping environment, while negotiating skills won’t do much good. “Consumers need to be patient shopping for a vehicle,” Brinley said. “It could take time to find the vehicle they want in a configuration that they are looking for, so be prepared to either wait or compromise. There are fewer incentives and discounts to be found, so expect to pay MSRP.” Fiorani offers some candid advice to prospective car buyers, encouraging them to put off a car purchase if possible due to rising prices and lack of inventory. “It’s not a good time, historically, to purchase a new vehicle — or used vehicle for that matter, but if you have a vehicle to sell, it’s absolutely the time to do that,” he said, referring to the soaring trade-in values many consumers are now seeing. Jominy says only about half of car shoppers have experienced the new normal of the inventory shortage. For the ones who haven’t, he advises planning ahead, picking up the phone and speaking with the dealer to find a suitable option. “We still have 2 million units on the ground,” Jominy said. “Different brands are affected in different ways. Kia actually has more inventory than they had two years ago. If you are in the market, you can find something.” This is the time to cross-shop various brands and models, he added. Automakers have an average of six different SUV models on the lot, so being open to multiple vehicle options can pay off.Tags: 2019 Subaru Forester Touring, 2020 BMW iX3, 2020 Chevrolet Suburban, 2020 dodge charger, 2020 EQC, 2020 Ford Super Duty, 2020 Honda Pilot, 2020 Kia Optima, 2020 Mercedes Benz, 2020 Nissan Versa, 2020 Subaru WRX STI, Audi SUV, BMW, Brandon K. Hardison, Chevrolet Car, Chevrolet Sonic, Dodge charger, electric vehicles, honda, Honda Pilot, Hyundai SUV, Mercedes Benz, Nissan Rogue, SUV, upcoming car, Volkswagen, Volkswagen Tiguan SEL Premium R-Line, Volvo Car
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