Auto industry sees increased demand despite shortages


The pandemic is impacting industries around the world, especially those that depend on high-tech microchips for their products. With the closures linked to the pandemic, the supply of microchips is low, which is hitting the auto industry particularly hard. All automakers are experiencing pandemic-related chip shortages, leading some to cease production of certain vehicle models or to produce vehicles without critical components requiring chips.

Despite the pandemic-related shortages, there is a demand for automobiles and car sales are on the rise. As the pandemic has started to subside, major trade shows are once again being held in person for the first time in two years. One of the most important is the SEMA show, where automakers traditionally present new vehicles and highly customized vehicles to the masses.

Automakers around the world are looking for ways to reduce reliance on microchips and obtain the raw materials needed to build vehicles in demand. An interesting revelation from Mike Spagnola, Vice President of Product Development and OEM Relations at SEMA, is that despite the current suffering in the supply chain, business has been strong as many people have stayed at home. and chose to work on their cars. This has led to strong sales for many auto industry aftermarket suppliers.

Shortages of microchips and materials have also had an impact on these aftermarket manufacturers. Many build parts that vehicle owners add to their vehicles to increase performance, capability, and style. A representative from the SEMA show said he expects the shortages to continue next year, but manufacturers are working to get around the shortages and drivers can buy cars.

Depending on what part of the country you live in, there may not be a lot of cars to buy, as anyone who has had to buy a new car in recent months can attest. The often exorbitant prices of used vehicles force many consumers to look for new vehicles instead. As a personal example, recently my wife’s 2014 Ford Fiesta, a model known for its transmission problems, suffered a transmission failure. We live in the front of the Rocky Mountains in Colorado, and her drive takes her through a mountain pass where there is no cell coverage, and freezing temperatures can lead to death for stranded motorists.

Rather than risk another transmission failure, we chose to buy another car. In many cases, used car prices were comparable to what they cost in new condition despite a few years and tens of thousands of kilometers on the clock. We decided that if we had to pay money for a new car, we would just buy a new car. However, within a 500 mile radius, the supply of economy cars of $ 25,000 or less was extremely limited. There were no new Toyota Corollas, Hyundai Elantras, Honda Civic or Kia Fortes within 500 miles. But we were able to find a mid-range Nissan Sentra SV that sold at MSRP with no discount, but it was the same price as the used models with tens of thousands of miles.

The advantage of the chip shortage is that now is the perfect time to sell a used car. If you’re stuck in a lease or loan for a vehicle you don’t like, many car dealers are willing to spend a lot more than they normally would to buy a lease or pay off a car out of pocket. which you still have money on which you do not want anymore. Another personal example, I was able to get out of the lease of a Jeep Renegade that I no longer wanted because the Jeep dealer was desperately looking for something other than top-of-the-range Grand Cherokees and Wranglers. It’s a car that I tried to get out of six months ago and I should have shelled out thousands and thousands of dollars out of my pocket at the time. Interestingly, when I checked the dealer’s website a few days later, Renegade was listed at $ 1,000 more than it cost new at one year and 11,500 miles.

The chip shortage and the pandemic have certainly brought about changes in many industries and in the lives of many people. The benefit is more value in used vehicles that you may not want anymore, and many companies have found it okay to allow people to work from home, which is a great thing for many. of people.


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