will chip shortage affect car prices


Car prices are expected to remain high until 2023 due to a chip shortage.

According to data compiled by Black Book, Hearst’s data and analytics unit, new-car sales in June were down around 14% from the previous year (2020 isn’t a good year to compare to what’s “normal” because it was during the pandemic). The scarcity had an impact on actual sales for the first time this month. The number of new vehicles available in the marketplace has decreased significantly, as shown in the figure above, which uses a two-week moving average to indicate the average number of new listings.

A shortage of computer chips that had caused auto prices to skyrocket appeared to be easing in the spring. Consumers appeared to be getting some relief. However, that hope is diminishing as a surge in COVID-19 instances from the Delta variant in various Asian countries worsens the supply problem, delaying the restoration to normal car production and artificially limiting vehicle availability.

According to economists, this means that record-high consumer costs for new and used vehicles, as well as rental cars, will likely continue throughout next year and may not come to earth until 2023.

According to Kelley Blue Book, new-car prices set a new high for the fourth month in a row in July. A typical new automobile costs more than the manufacturer’s suggested retail price, with the average transaction costing $42,736, up 8% from a year before.

The global semiconductor deficit is creating havoc on the auto sector, squeezing the supply of microchips used in everything from cars to robotic vacuum cleaners. Almost every manufacturer has experienced production delays and temporary shutdowns as they wait for the chips they need to finish building cars on the assembly line, the most recent being Cadillac’s announcement that the Super Cruise driver assistance and monitoring technology would be temporarily suspended from its Escalade SUVs.

The chip shortage effect may not affect all models of cars

“Because the automobile shortage isn’t hitting every model in the same manner,” Fisher argues, “consumers can take advantage of the auto market’s forgotten corners.” “It pays to conduct a lot of research before you commit to anything now more than ever.”

Most automakers are considering at least one manufacturing stoppage to allow microprocessor supply to catch up. Chips are now as important as steel, aluminum, and plastic in the production of automobiles.

To reduce the impact of component shortages, some automakers are changing how their vehicles are equipped. For the time being, General Motors is deleting the fuel-saving cylinder deactivation feature from its full-sized trucks, and Nissan has disabled navigation. It’s possible that some of the things you’re looking for will be more difficult to come by. It’s even more crucial to double-check that the model you’re buying has all of the features you want.

The Importance of Semiconductors

Microchip processors, which are used in smartphones, televisions, internet routers, and even home climate control thermostats, are found in semiconductors. Electronics are already commonplace in automobiles and trucks, therefore they have them as well.

Every car contains at least two or three dozen microchips, according to Abuelsamid, which regulate everything from infotainment screens to fuel management and stability control. According to him, luxury vehicles and vehicles with high-tech features such as enhanced safety systems and driver assistance features may have 100 or more processors onboard.


The silver lining is that, due to the pandemic, it is a good time to sell a car if you don’t use it often. According to researchers, rising new car prices have pushed more consumers into used automobiles, making them scarcer and more expensive. To put it another way, it’s a buyer’s market.

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