Auto Industry - Chip Shortage - New Car Prices - Used Car Prices - Inflation - (2 Viewers)

My understanding is cars are being parked in stadiums when they're waiting for chips. The US government is also going to certain processor manufacturers and buying all their stock and production, basically telling them "we get them first". It's impacting at least three of my customers (electronics assembly services).
 
So what will the market look like when the chip shortage is caught up? Dealers will have 1&2 year old “new” models they’ll need to get rid of? Could it have the reverse of the current situation? I’m asking because I don’t know.
For the next 12 months, new cars will still be difficult to find/purchase. For example, our Subaru store is sold out of Foresters until March. 3 month wait list. Most Ford trucks, you need to order what you want and wait 3 months.

For the next 2-4 years, used cars should hold their values. Since leasing is almost non existent, there is not the normal supply of quality used cars (leases maturing) being dumped into the used car market.

For the next 2-4 years, new car manufacturers will eventually get their micro chips, and they most likely will fall into old/bad habits, and build too many cars and send them to dealers, and rebates and incentives will be needed to sell cars. However, as much as people are buying cars now because of hysteria, there is also pent up demand. Many customers are withholding their new vehicle purchase until prices come down, and then that pent up demand will keep demand high and supply low all over again. This is similar to seasonal trends and December sales. All month long in December customers are busy with holiday activity, and then BOOM the last week of the year is the busiest of any 52 weeks, because it's just a few weeks of pent up demand. Imagine a few years of customers waiting until this chip problem is resolved, that could be some serious pent up demand. The norm is 17 million annual sales, right now we are around 14-15. There is millions of people waiting to buy new cars...

Interesting time ahead for the auto industry.

Car Dealer/Car Buying RANT...car dealers provide a great product and should provide great customer service. Don't feel like your money is being wasted on a vehicle purchase or you are getting taken advantage at MSRP. Save that for the jewelry, furniture stores, and pcf hustlers ;-) (joking). This isn't the 70's and 80's or even 90's when customers came to car dealerships with no knowledge. Interest rates are at an all time low, there is plenty of information on how to find out what your car is worth, and the quality of vehicles have never been better. Mark up on vehicles is lower than what you think. Around 5% of the MSRP. It's easy enough to go online at see what invoice is and what MSRP is. The big bummer for consumers is there are no factory rebates, and those could be gone forever if the factories play this right. That's Tesla's model. Fixed pricing, ordering only, and not excess inventory.
 
What's the major holdup with the chips that can't be resolved with new factories over the next 6-12 months? Wouldn't this demand for chips cause the chip manufacturers to eventually flood the market with chips. I don't know the complexity, but I assume it's just a matter of time before chip supply goes back to normal.
 
What's the major holdup with the chips that can't be resolved with new factories over the next 6-12 months? Wouldn't this demand for chips cause the chip manufacturers to eventually flood the market with chips. I don't know the complexity, but I assume it's just a matter of time before chip supply goes back to normal.
Semi conductor plants take 1-2 years to spec and build out and they will have a lot of catching up to do (pent up demand, we are millions short of normal annual new car sales).

Will the manufacturers then realize there is no benefit to over producing cars and only order what customers order, eliminating rebates and incentives?
 
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What's the major holdup with the chips that can't be resolved with new factories over the next 6-12 months? Wouldn't this demand for chips cause the chip manufacturers to eventually flood the market with chips. I don't know the complexity, but I assume it's just a matter of time before chip supply goes back to normal.
Manufacturers are also risk-averse. They won't add additional capacity just because of a temporary surge that will (eventually) work itself out over the course of time.
 
I also think once manufacturers start producing cars en masse, the rental car companies and other fleet customers are going to buy up a ton, as they are long overdue. Once this happens, they used car market is going to absolutely be flooded with inventory, and THAT is where the deals will be
 
I also think once manufacturers start producing cars en masse, the rental car companies and other fleet customers are going to buy up a ton, as they are long overdue. Once this happens, they used car market is going to absolutely be flooded with inventory, and THAT is where the deals will be
Like you said. Pent up demand. Rental car companies need their cars too. We are millions behind and the rental biz needs cars.

But it will take years before those rental cars get flooded into market. Next time you rent a car check the mileage. They are keeping cars up to 70, 80,000 miles now bc they can’t replace them.

And never buy a rental car. They are beat to shit! But that’s where you find deals!
 
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Not subscribed to the NY times, won't let me read article...
It said their vehicles use less chips, more software. In addition, they following the ordering process so the pipeline is much smoother then traditional manufacturing that just ramps up and builds a shit ton and customers expect to have them same day on a dealerships lot. When you order a Tesla, if there is a delay it’s less of an issue, bc ur aware it’s an order, with a lead time.
 
Does it mention, the dealership model is going the way of the doodo bird? For EVs with less maintenance, online orders, home delivery, online order tracking. Dealerships will fight and have fought EV adoption for decades. But, unfortunately market forces will ultimately close their doors.
 
Does it mention, the dealership model is going the way of the doodo bird? For EVs with less maintenance, online orders, home delivery, online order tracking. Dealerships will fight and have fought EV adoption for decades. But, unfortunately market forces will ultimately close their doors.
Dealership model is a long way from going away. Gasoline cars will still be around for 25+ years. In addition, too many state laws protect dealers from the existing manfucafurers going direct to consumer sales. Tesla was able to bc it was a new biz and they had to go every state supreme courts to allow it. Existing Ford/Honda etc state laws and dealer agreements forbid the manufacturer from direct sales. So those manufacturers will always have dealers, with EV like they do now.

EV’s to your point do offer considerably less maintenance and less service with no combustion engine.

But EV batteries are a nightmare. Let’s wait a decade when we have 20-25 million on the road before we crown them. They are not nearly as environmentally friendly as advertised. It’s a new energy source that will cause new problems. And the manufacturer doesn’t give a shit about the environment, what appeals to them is exactly what you said, less warranty work.
 
Does it mention, the dealership model is going the way of the doodo bird? For EVs with less maintenance, online orders, home delivery, online order tracking. Dealerships will fight and have fought EV adoption for decades. But, unfortunately market forces will ultimately close their doors.
If it’s anything I learned the past year, the existing manufacturers are horrible at communication w the customers and direct ordering. It’s been a nightmare. The existing manufacturers need the dealer body.
 
Ok, so i wasn't aware of the laws that dealerships are supported by. Well unless this changes I see the big 3 demise coming sooner because of it. They just won't be able to compete on price. To much over head costs and their existing mountains of debt! How will they be able to make new factories, pay for R&D, attract new engineers? Even after all of these obstacles, who says the public will want their products? Gonna be interesting, for sure. Thanks for the topic!
 
The big three (and other automobile manufacturers) make a wide range of products, both in style and in cost.

While Tesla does make a nice products, it is pretty limited in selection, and very pricy.

Who says the public still wants their product? Well, the public does. They are buying everything they can get their hands on.

Models that don’t sell well get discontinued, while those that are consistently high volume sellers stay on.
 
Ok, so i wasn't aware of the laws that dealerships are supported by. Well unless this changes I see the big 3 demise coming sooner because of it. They just won't be able to compete on price. To much over head costs and their existing mountains of debt! How will they be able to make new factories, pay for R&D, attract new engineers? Even after all of these obstacles, who says the public will want their products? Gonna be interesting, for sure. Thanks for the topic!
The Big 3 aren’t going anywhere. Their EV technology is already in motion and the Ford EVs are selling extremely well, check their stock.
 
Found an interesting article about Harley Davidson transitioning to Electric motorcycles thru a SPAC called Livewire. I can see all legacy auto's doing a similar transition with Electric vehicles! Mostly because of strangling dealership models, outdated factories/equipment, ect.

https://www.cycleworld.com/story/mo...-livewire-electric-motorcycle-partners-kymco/
Dealership models aren’t struggling. They having their best years ever and are crucial to the factories ability to handle customers. Most dealerships all have the equipment and training to handle EV.
 

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