Supply Chain Issues, Buying a Car Sometimes Means Getting on a Plane

When Rachael Kasper started shopping for a new car in August, she had her heart set on a Ford Escape plug-in hybrid. The problem was that Ford didn’t do most of them this year for the following reasons. computer chip shortage it slowed down worldwide automobile production.

Miss Kasper was vacant, first in her hometown of Michigan and later in neighboring states. When he expanded to the East Coast, he found one — 537 miles away, at a dealership in Hanover, Pa.

“I flew to Baltimore, bought a Lyft at the dealership, and then drove it home,” said Ms. Kasper, owner of a watersports equipment retailer. “It was quite an adventure.”

Computer chip shortages, largely caused by decisions made in the early days of the pandemic fluctuating in the automobile industry this year. Manufacturers had to close factories due to a shortage of parts, leaving auto dealers millions of fewer vehicles to sell.

As a result, car buyers They had to travel hundreds of miles to find the vehicles they wanted, dropped bargains and accepted higher prices, and even lost used cars that were repaired after serious accidents.

The supply squeeze coincides with a marked increase in demand. Some people try to avoid public transport or taxis. Others just want a tool. many families saved thousands of dollars partly thanks to subsidies and incentive payments, and because they spend less on travel, restaurant meals and other luxuries that fall by the wayside due to health problems.

The end of the year is normally the peak sales season, with some automakers running ads featuring cars as gifts complete with giant bows. This year, however, consumers are finding it difficult to find the car of their desire. not fast, easy or cheap.

Ed Matovcik, a wine industry executive in Napa, California, has decided to upgrade to a German electric car, the Porsche Taycan, as his contract on the Tesla Model S is nearing the end. He ordered one, but it won’t arrive until May, three months after Tesla was forced to give up.

He plans to rent a car until Taycan arrives and looks on the bright side. “It’s a different world now, so I don’t really mind waiting,” he said. “I’m thinking of renting a pickup truck for a week so I can finally empty out my garage.”

The disruption in car production spread in waves in the automotive world. For some time in the spring and summer of 2020, car rental companies stopped buying new cars and sold most of their cars to survive as travel was restricted. Now these companies are trying to take advantage of a hot rental market and often compete with consumers and dealers to buy cars.

The huge discounts and incentives that were once standard features of buying a car in the United States have almost disappeared. Instead, some dealers now add an extra $2,000 or $3,000 to top of the list price for new cars. This has angered car buyers, but dealers who raise prices know that if one customer gives up, the other is usually waiting and willing.

According to Edmunds, an auto data provider, the average price of a new car in November rose to $45,872 from $39,984 a year ago. The average price paid for a used car is now more than $29,000, up from $22,679 in 2020, and Edmunds expects it to exceed $30,000 for the first time next year.

Due to rising used car prices, some consumers are spending more on repairing old vehicles and giving them a longer service life. More cars damaged in accidents are being repaired by insurers rather than declared full damage and sent to the junkyard.

“The math has changed about whether a car is a total,” said Peter DeLongchamps, senior vice president of Group 1 Automotive, a Houston-based auto retailer that runs its own chain of auto body shops. “Our parts and service business is very good. We see more cars being repaired due to higher used values.”

The auto industry’s chip shortage stems from the start of the pandemic in spring 2020, when automakers shut down factories for weeks and cut orders for computer chips and other parts. At the same time, home-bound consumers were grabbing laptops, game consoles, and other electronic devices, encouraging their makers to increase their semiconductor orders. When automakers restarted production, they found that their chip suppliers had less production capacity for them.

As a result, automakers have produced far fewer trucks and cars this year than they had planned. In addition to closing factories, they built vehicles that lacked certain features, such as heated seats and electronics that maximize fuel economy. Tesla dropped the electric lumbar support on the passenger seat of some models.

Low production has limited new vehicle sales this year. Edmunds expects the industry to sell approximately 15 million light trucks and cars, well below the 17 million considered a benchmark in the years before the pandemic. It is expected to reach 15.2 million vehicles in 2022, a modest increase.

Automakers have said chip supply has improved in recent months, but executives expect components to remain a problem for most of next year.

Some automakers are testing new strategies to ensure a stable chip supply in the future. Ford Motor recently said it is collaborating with GlobalFoundries, which operates semiconductor factories. Develop special chips for Ford vehiclesHe said he was looking for ways to increase chip production in the US.

General Motors is working with chip manufacturers to develop three core chips that can meet most of their needs. The company expects this strategy to increase supply while significantly reducing costs.

“We’re seeing the chip issue persist into the 22nd,” Ford’s CFO, John Lawler, told analysts on a conference call in October. We are doing everything we can to get as many chips as we can.”

This means consumers will pay full price for new cars and shop everywhere.

Yet for some car buyers, the market is very rich.

Tom Maletic, a retired medical sales executive in New Orleans, recently started shopping for a two- or three-year-old Ford EcoSport, a small sport utility vehicle. He had hoped to find one that had less than 20,000 miles and was priced around $15,000; that was the amount he paid for an EcoSport for his wife earlier this year. “But it was $17, 18, 19, $21,000,” he said. “And these were five years old, six years old, and they had a lot of miles on them.”

Finally, he flew to Michigan to retrieve the 2015 Ford Escape that he passed on to his son, and drove it back to New Orleans 1,100 miles away.