The Auto Shortage Goes Beyond Just Chips

Show your neighborhood auto dealer some love. They’re going through a really rough time right now.

When Covid first hit in Asia plant closures at microchip processing plants ground to a halt and initiated a domino effect that is still being felt 18 months later, and it’s not going to go away any time soon.

“I don’t think supply chain and purchasing departments have ever been so busy. It’s 24/7,” says Carla Bailo, the President and CEO of The Center for Automotive Research in Ann Arbor, Michigan. The problem isn’t just with microchips. It’s the whole supply chain, which German engineering for Bosch this week said was irreparably broken.

Bailo says Covid outbreaks in Vietnam and Malaysia, areas that haven’t had earlier waves of the virus, are creating another round of massive supply chain backups. It’s systemic. “We’re looking at such a shortage for truck drivers, we have ships piled up at the ports because of a lack of manpower at the ports to get that product out. It’s not that product doesn’t exist. It’s just that we can’t get it where we need for it to go,” she laments.

And all of that weight is falling on the shoulders of your neighborhood car dealer. Manufacturers have been cutting back on output for months and it’s only going to get worse. Bailo says car-buying won’t return to anything resembling normalcy until next year. “By mid-year we should have the supply back in.”

In the meantime, pressure is again being put on the used car market because of the scarcity of new cars and prices are rising again.

photo: Getty Images

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