Chip Shortage Expected to Increase New Car Price Tags
» Posted May 19, 2021 • Resources | Share This Post
Just when automakers thought they were turning the corner on a pandemic prompted slow down in car buying, a new problem is making it harder to churn out vehicles.
Semiconductors are in short supply worldwide, stalling vehicle production and upping the prices at the dealership.
Honda recently announced that it will shutter three Japanese plants for a handful of days next month as a result of the shortage, while BMW is set to pump the brakes on production in Germany and England, Bloomberg reports. They join the likes of Mitsubishi, Jaguar and Volvo, among other global auto manufacturers slowing production.
Meanwhile, Ford Motor Co. dialed back its earnings expectations for the year, citing the shortage.
The shortage is the result of a confluence of events, largely driven by the coronavirus pandemic. Here is how Car and Driver’s Sebastian Blanco describes it:
“At the start of the pandemic a year ago, automakers reduced their orders, thinking that they wouldn't be able to build as many new cars as they originally thought. When the market rebounded, automakers discovered that chip suppliers were busy fulfilling orders for computers and gaming consoles, given that the companies building consumer electronics didn't see a pandemic-related decline. Just the opposite, in fact.”
Now, chip manufacturers cannot even keep up with the demand from tech companies. Apple has said the slowdown is making it harder for the company to fill orders for devices.
If there is one group that is not crying over the chip catastrophe, it is car dealers. Less supply means dealers can charge a higher price for their vehicles.
"I'll take this till I'm six feet under," Mike Bowsher, who runs a Buick-GMC dealership near Atlanta, recently told Reuters. "Customers are coming in just saying, 'I'll take it, full sticker, get it ready.' It's nuts."
Detective Car? A California Lemon Law Attorney Can Help
The vehicle production blip comes as auto manufacturers around the world still struggle to put cars on the road that are actually safe to drive. Millions of vehicles are recalled each year because of a wide spectrum of defects that increase the risk of a crash.
Fortunately, the California lemon law helps protect car owners in the Golden State. The law requires manufacturers to perform various repairs on cars while they are under warranty. It also forces the companies to buy back or replace covered vehicles that they cannot or will not fix.
If you have been stuck with a defective vehicle, a California lemon law attorney at Bickel Sannipoli APC can help. We are pleased to be able to represent people across the state.
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