What is Causing the 2021 Vehicle Shortage?
The COVID-19 pandemic resulted in many consumer goods shortages across the globe. You’ve probably noticed that it has been more difficult or expensive to attain items such as lumber, gasoline and new and used cars. While many different factors go into these shortages, the car shortage in particular is due to just one small part: the tiny semiconductor chip.
What is a semiconductor chip?
Only slightly larger than the size of a quarter, semiconductor chips are used in computers, smartphones and other devices including vehicles. These chips are necessary for device function, and with increased demand for cell phones and personal devices, production hasn’t been able to keep up.
Why is there a chip shortage for vehicle manufacturers?
In March 2020 many automakers responded to the recession by canceling orders for chips assuming that car sales would decrease. Sales of new cars took a brief nosedive, but demand quickly increased due to stimulus checks and competitive APR financing offers. When factories opened back up to keep up with growing demand, many automakers were missing the chips they needed to keep up. By then, chip suppliers were already busy keeping up with the demand for phones, tablets and video games. Without chips, the vehicles produced won’t operate. Tens of thousands of vehicles have filled empty parking lots awaiting semiconductor chips before being shipped to dealerships.
Is there a monopoly for semiconductor chips?
Just a few semiconductor foundries provide most of the world’s chips. While materials for semiconductors are primarily sourced from Japan and Mexico, the chips are constructed mainly in Taiwan and China.
What are semiconductor chips used for in vehicles?
As cars become more and more dependent on electronic systems, semiconductor chips are necessary. Parts like touchscreen entertainment systems, smart safety systems and even airbag deployment require the use of semiconductor chips. Cars now require as many as 100 chips to perform all electronic functions.
How has the chip shortage affected the price of used cars?
The shortage in new vehicles has made the demand for used cars increase, causing used-car prices to go up. If you’re considering selling your car, right now is the perfect time to make sure you get the best return on your investment.
Are you ready to sell your car? Right now is the best time to sell your vehicle while demand is still high. When you sell your car at Landers Kia, you’ll walk away with a check in no time. Learn more about selling your car with us here.
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