Chip Shortage Takes 180,000 Cars Off the Assembly Line

AutoForecast Solutions (AFS), a private auto market forecasting database, has tasked itself with providing updates on vehicle-related chip supply fluctuations ever since the shortage began. According to Automotive News, the latest update is ugly: the 180,000 vehicles missing from the world’s assembly lines this week constitute the largest dip in manufacturing AFS has seen in recent years.

Europe was previously the most-impacted manufacturing region on AFS’s list; so far, 1.04 million vehicles have been cut from its assembly lines this year. But North America’s 100,000 vehicle hit has awarded it that not-so-glamorous spot. North America’s year-to-date new vehicle manufacturing losses now total 1.06 million. AFS estimates another 800,000 vehicles will be dropped from global factories before the end of 2022.

For those who have been holding off on buying a new car, this is bad news. Vehicle prices have been alarmingly high for the last several months, thanks to COVID-19 manufacturing adjustments and silicon scarcity (which are in many cases intertwined). While used vehicle prices seem to be coming back to Earth, Kelly Blue Book reports new car prices are higher than ever before, with an average price of $48,043 per vehicle last month. With the chip shortage expected to extend into 2024, it’s unlikely that new car buyers will see relief anytime soon—that is, unless the global economy experiences a “slowdown,” which AFS director of vehicle forecasting Josh Shastal expects to occur sometime in 2023.

The chip shortage hasn’t just impacted the availability of whole vehicles; it’s also changed how automakers assess their luxury feature offerings. General Motors paused heated seat and heated steering wheel installation back in November, thanks to limited chip availability. Only its higher-end, full-size trucks included these features, which didn’t help buyers’ budget concerns. (Thankfully, this has nothing to do with BMW’s pay-to-play heated seat offerings, which have been generating outrage worldwide.)

Some hope the CHIPS Act, which was sent to President Biden’s desk late last month, will help alleviate the chip shortage in the US. The bill sets aside $52 billion to support US silicon manufacturing efforts and offers tax credits to companies working toward the same mission. It’s expected that Intel (whose Ohio “megafab” was on hold prior to the bill’s passage) will increase production to compete with Taiwan’s TSMC. But this is a long-term fix, and odds are looking slim that automakers—in the US or other parts of the world—will see an increase in chip availability in the coming months.

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