SHOPSMART AUTOS – CUSTOMER INFORMATION – MAY 9, 2021 (PT.2)
Why could you soon pay more for a used car?
Will any vehicles be hard to find?
It’s possible. Dealers typically have a few months supply of each model, so they’re not likely to run out immediately. But temporary production shutdowns of vehicles like the Ford F-series pickup – the best-selling model in the country – suggest that supplies could begin to dry up. At General Motors, plant shutdowns have throttled production of vehicles like the Chevrolet Colorado pickup, the Chevrolet Malibu sedan and the GMC Terrain SUV. It’s not just U.S. automakers that are hurting. Foreign automakers have also been affected.
Production connected to Honda vehicles fell 18% in January, compared with a year earlier, according to Panjiva, the supply chain research division of S&P Global Market Intelligence. But automakers have significant incentives to preserve the production of high-volume, high-profit models like pickups and large SUVs. So if forced to prioritize, they are most likely to preserve those vehicles over poorly selling passenger cars.
Get the Coronavirus Watch newsletter in your inbox.
Stay safe and informed with updates on the spread of the coronavirus Delivery: Varies Your Email “Those vehicles are so important to the financial health and business model of those companies,” Kim says.
Will automakers take shortcuts to get around the shortages?
It’s possible. GM took the unusual step of reducing the fuel economy on certain Chevy Silverado and GMC Sierra models by forgoing a computerized module that needed a chip. That resulted in a fuel economy reduction of about 1 mile per gallon. “Rather than stopping production they decided to go ahead and ship,” Kim says. But they can’t get around the shortages forever. As technology advances, self-driving vehicles and increasingly computerized cars will demand more and more chips. “The connected and autonomous vehicles of the future are effectively supercomputers on wheels requiring dramatically higher chip content and driving greater convergence of the automotive and semiconductor industries,” said Gary Silberg, global automotive sector leader of consultancy KPMG, in a February report. “In tomorrow’s world, these remarkable, integrated circuits will be even more strategically important.”
Is every automaker in the same boat?
Yes and no. Hyundai Motor Group, which owns the Hyundai, Kia and Genesis brands, saw the shortages coming and acquired extra chips in advance. “They did anticipate this issue, which is very smart on their part,” Kim says. But the Financial Times reported on Tuesday that Hyundai and Kia have scaled back production on less popular models.
Are suppliers catching up?
Yes, but it’ll take a while. Intel, for example, on Tuesday announced plans to invest $20 billion in two manufacturing plants in Arizona. That kind of operation can’t be launched overnight.
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
Trackback from your site.
