In the market for a new car? You’ve probably heard about how the shortage of semiconductors has lowered the supply of vehicles considerably – while the line of customers outside the most prominent dealers grows exponentially. These chips being critical technology in modern-gen cars, the tech world watches as the situation unfolds. If you’re in need of a new vehicle this fall, here’s the outlook on what to expect from these top car manufacturers.
Looking to buy a new car this fall? Best to start thinking about it now. Consumer demand for new vehicles continues to rise as the world continues to bounce back from the pandemic – while the global microchip shortage that plagues the most popular car brands continues to keep dealership supply limited.
This tech-industry-wide shortage is forecasted to linger through to 2023 – but like many people, you may not be able to put off a new vehicle purchase that long. Or maybe you keep hearing talk about chips and manufacturing halts, and simply just want to know what the heck is going on at the crossroads between technology and car manufacturing.
Here’s a brief history of the situation, along with a look at how the top car brands are poised to tackle high demand going into the fall – and the moves they are making to secure the tech they need to hit the road on production.
Some Context On Global Chip Shortage
When we think of car manufacturing – the mind goes first to pistons, gears, and axles. But just as everything else we use in everyday contemporary life – digital technology is essential to the latest fleets of automobiles.
It’s not just the touchpad consoles (growing larger by the day). Semiconductors rule the modern vehicle, everything from powered steering, and driver assist, to the quality of life features that define the latest generation of cars.
Take electric vehicles (which take the lion’s share of chips) out of the picture – and it’s still easy to see why production has been totally knee-capped. For even “traditional,” non-electric cars, the percentage of total manufacturing cost going to electronics has risen from 18% to 40% in the last 20 years.
The cat’s now out of the bag. Consumers have come to expect these smart features – automakers have spent years pushing the industry into reliance on highly-specialized tech.
So why isn’t the production of these essential parts fit to meet this new demand? What caused the shortage of microchips?
To make a long story short, we’ll blame the pandemic.
There’s a certain lifespan required of a quality vehicle – one that flies in the opposite direction of the regular upgrades and planned obsolescence of the types of chips you’d find inside your smartphone, laptop, or similar devices.
As a result, automakers rely on legacy chips – older models of semiconductors proven to last a long time (even for the most reckless of drivers).
These chips are highly specialized and created by manufacturers expressly for cars.
Covid hits, initially driving down the sale of new vehicles. We’re stuck inside – commutes are no longer a Monday morning reality – and auto sales see as much as a 30% drop in some places. At the same time, demand for consumer electronics shoots upwards – fueled by the number of people working from home.
The chip manufacturers – of which there is a select few – hear crickets from the carmakers and see dollar signs in the consumer products market.
Now, as we pump back into business in the automotive industry (faster than anticipated) – the chipmakers, consumer electronics brands, and vehicle manufacturers are in a lover’s triangle, with the latter being forced to beg for whatever scraps they can get.
Looking for a specific car brand this fall? Here’s what to expect from these top manufacturers when it comes to the global chip shortage.
Ford
When it comes to the current zeitgeist that the shortage will cease in 2023 – there has been nobody more bullish on this idea than Ford CEO Jim Farley, who’s been throwing around that projection as early as late 2021.
The shortage forced Ford to throw some of the 2022 F150’s features overboard – with the same technology-fueled add-ons remaining absent from the latest 2023 iteration of America’s most popular vehicle.
Even still, Ford had to close orders on the 2022 model last May, with wait times now reported to take up to two to three months. As this goes to press, preorders of 2023 F-series trucks are underway – expect an even longer wait as we move towards fall.
F-series being the crown jewel and beating heart of Ford’s fleet – expect similar delays if you’re looking to get behind the wheel of a Mustang, Explorer, or other models.
Toyota
The easing of lockdowns in China has let up the global chokehold on chip production slightly – and the east Asian car manufacturers have been the early benefactors of such a shift.
Toyota – while no doubt exactly where they expected themselves pre-pandemic – has overperformed tempered expectations in the last couple of months and remains optimistic going forward into the fall and 2023.
Sales fell almost 10% below expectations between April and June – what Toyota is calling an “intentional cooling-off period.” Whether this is really a boldly-foresighted strategy or a spin on sour grapes, it has paid off. August has seen an uptick in production – along with projections that show the Japanese automaker reaching its target of 9.7 million global vehicle sales by year end – making them a safer bet for those wanting a new car this fall.
But still, better to get in the queue sooner than later.
Hyundai
As a result of the chip shortage, Hyundai’s sales have fallen 11% from last year. But the South Korean carmaker is busy doing something about it. Back in 2021, Hyundai proudly announced that they were starting production on their own production of semiconductors – removing as many middle men as they could for the benefit of their consumers.
But as you’d expect – it’s hard to vertically integrate into a technology-centric space where six companies control 90% of the market.
It’s now a year later, with August only hearing murmurs about the groundwork being laid by Hyundai Mobis – the brand’s part manufacturer – on production of power semiconductors (only one of the many chip types needed in modern vehicles).
Recent reports suggest up to an 8 month wait time on popular Hyundai SUVs. Ouch.
Subaru
Subaru long had a reputation for keeping stock limited – and has been hit harder than anyone by the chip shortage. As this goes to press, online car retailer Edmonds reports that three of the most difficult cars to buy right now belong to Subaru.
Subaru started this year with a 45,000 car backorder. They’re still playing catch-up, and new vehicles that somehow make it onto dealership lots are gobbled up within the span of a week.
Sold on the idea of a new Subie this fall? Good luck.
Tesla
Let’s end by looking at the electric-only unicorn in the car making space: Tesla. Having infrastructure and experience on the technology side of the ball, they’ve been able to really take a big bite of market share while their competitors reel from the shortages – something that this upstart brand has needed to do for a while.
With oil prices as they are (another element in this entire story that compounds on the chip shortage), more people are looking for electric vehicles. By turning to substitute chips (a move possible due to the novelty and flexibility of Tesla’s pipeline), they’ve been able to meet this demand, though not without a few concessions.
The release of the now infamous Cybertruck was put off until next year, production on a budget-friendly Tesla car has been postponed, and certain semiconductor reliant features have been slashed from new models to make the production pipeline work.
Whether this is all to do with the supply chain – and not Elon Musk’s tendency to over-promise – is not entirely certain.
Regardless, those chomping at the bit for a car that can do a funny dance with its self-opening doors will be happy to see that there are Tesla models that will be ready to drive mid-fall.
Better Late Than Never…
The prevailing wisdom seems to suggest that spring 2023 will be a better time to buy a car than this fall. But life doesn’t always work out like that – and your current situation (or that of your last vehicle’s busted engine) may be driving you to act fast and find a new car this fall.
If this is the case, start getting the wheels turning now. Supply varies by region – so start putting out feelers – and be open to exploring makes and models that fit both your needs and time constraints.
Be wary – one thing hasn’t changed: car sales people and their eternal passion to sell cars. Compare your situation with others in your area who have gone through a new purchase recently to watch out for the dealerships that make promises they can’t live up to!
This is a push-comes-to-shove moment for the car industry – which are now being forced to vertically integrate technology production – or get thrown through the wringer by chip manufacturers who have them over a barrel.
With this ongoing chip shortage – we’re talking months, not weeks, when it comes to wait times. So if you want a new car this fall, get the process started today!
