The Microchip Shortage and How It Has Changed the Used Car Industry
Last year’s pandemic has caused severe and enduring disruptions in the production of microchips. This global shortage of microchips has caused a significant slowdown in the automotive industry, forcing automakers to delay or halt the production of many cars.
Nowadays new cars usually come with digital speedometers and other artificial intelligence-driven tools, like back-up cameras or lane departure warning systems. Adding these innovative features requires automakers to rely heavily on microchips. Without these tiny silicon elements, many car manufacturers are unable to produce new vehicles.
Another factor driving the current microchip crunch is self-preservation. Automakers are currently attempting to acquire more supply than they need so they don’t face these types of shortages again. This desire to stock up is causing additional supply crunch in the auto industry and beyond.
It is estimated that the car microchip shortage will cause global vehicle production volumes to drop by about seven to eight million units, causing billions of dollars in revenue loss.
This Too Shall Pass… But When?
Auto market analysts remain optimistic and predict that the problem will ease in 2022. However, chip makers are hesitant to make such claims and forecast that the shortage could last well into 2023.
Why Did The Chip Shortage Happen?
The first signs of trouble appeared in the early months of 2020. As COVID-19 continued to wreak havoc on the global economy, auto sales in the United States dropped as much as 50%. This caused many factories to close and cancel work orders.
When the corporate world started transitioning to remote work, many employees were forced to purchase essential electronics to work from home. This flooded chip manufacturers with a workload they could barely handle.
As restrictions were lifted and travel resumed, so did the demand for cars. When automakers attempted to order more chips, they discovered that chip factories were already doubling down on efforts to keep up with the skyrocketing demand. Since then, microchip manufacturers have not been able adequately increase production.
How Does This Affect the Car Industry?
As car shortage remains in full swing, dealerships are having an increasingly tough time replenishing their inventory. In July, the inventory of new cars for sale hit the lowest number since tracking auto supply began.
Consumer demand for cars has not decreased. This has resulted in empty car lots and an imbalanced ratio between new and used vehicles for sale.
Consider Selling Your Car in Washington D.C. or Baltimore to Easterns Automotive Group
Despite their best efforts, chip manufacturers are uncertain as to when microchip production will go back to normal. As some predict, this might take well over two years. This means that the demand and prices for used cars will continue to be on the rise.
Households that can take advantage of remote work may no longer need more than one vehicle. Why pay insurance and maintenance costs on a car you barely drive when you can sell it and make substantial profit?
If you’re thinking about selling or trading in your used vehicle, consider selling it to Easterns Automotive Group. We will gladly take your vehicle as is, so you won’t have to put any extra time or money into washing, vacuuming, etc. We’ll handle all the details and paperwork so you can quickly get your cash and go on with your day.
Get a Fast Cash Offer for Your Vehicle
At Easterns Automotive Group we make it easy to sell your car for a great price. By answering a few simple yet crucial questions about your car, we will be able to send you a firm offer within just a few hours.
You can also call us at call us at (877) 867-0641 or visit one of our dealership locations to get started.