The One Big Ticket Item You Won't Be Able to Find This Summer
If you've been saving money for this pricey item, you might have waited too long.
The COVID pandemic changed life as we knew it for more than a year, and though we're starting to see some semblance of a return to normalcy now that more people are vaccinated and mask mandates are being lifted, some remnants of the chaos COVID left in its wake remain, especially when it comes to the economy. Many industries were severely disrupted due to the havoc of the pandemic, leading to an increase in demand and a decrease in supply. From staples like toilet paper and cleaning supplies to favorite foods like bubble tea and chicken wings, so many products have become scarce at some point in the past 15 months. Recently, one of the biggest issues plaguing 30 percent of states in the U.S. was a gas shortage, but just as that is being resolved, another shortage could affect your daily transportation. Keep reading to discover what you'll likely have difficulty finding this summer.
There is a shortage of cars in the U.S.
The shared excitement to get out and explore this summer has people across the U.S. facing a car shortage as automakers have reduced car production, the Associated Press reports. Ford is planning to "produce only half of its normal number of vehicles from now through June," according to the outlet, and General Motors has stopped the production of many of its cars and SUVs. The Acura RLX, Alfa Romeo 4C, BMW i8, Cadillac CT6, Chevrolet Impala, Honda Civic Si, and Honda Civic Coupe will all no longer be produced in 2021.
"It's like toilet paper was a year ago," Michelle Krebs, executive analyst for Cox Automotive, told the AP. "Everyone is rushing to buy a car."
The shortage stems from pandemic shutdowns and a lack of computer microchips.
Jason Fichtner, an economist from the Bipartisan Policy Center, told Washington, D.C., ABC affiliate WUSA9 that the car shortages are the result of two things—pandemic shutdowns and a dearth of computer chips. "The automobile industry temporarily closed car assembly plants as workers couldn't safely work in close quarters of a factory floor," Fichtner explained. On top of that, there's a limited amount of computer microchips, which newer cars depend on. "One big reason automakers can't find enough chips is that the semiconductor manufacturers are giving priority to manufacturers of smartphones, video game consoles, and other consumer electronics," Fichtner said.
According to CBS Automotive Correspondent Jeff Gilbert, microchips are "the digital equivalent of screws" for cars. He told a local CBS News affiliate that the 2020 shutdown of car factories due to the pandemic prompted carmakers to limit their purchases of these types of chips. On top of that, Mark Wakefield of consulting firm AlixPartners told CNBC that the limited supply of microchips was brought on by a fire at a supplier in Japan and because of natural disasters in Texas and Taiwan.
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The COVID pandemic has also led to a rise in demand for cars.
According to recent new car inventory data by TrueCar, "vehicles are turning on dealer lots very quickly because of the supply and demand imbalance." The data showed that the average car is at the dealership for only 56 days, Valeri Tompkins, Senior Vice President, OEM Solutions at TrueCar, Inc., explained in a statement. She said that's "two weeks less on the dealer lot than during this exact time last year."
The shortage has also driven prices up of both new and used cars. "The average listing of the used vehicle on TrueCar is up $2,300 year-over-year, so if consumers are looking to sell their used vehicles, now is a great time," she added.
General Motors revealed earlier this month that new full-size trucks were being sold for 10 percent more than last year and full-size SUV prices were listed 20 percent higher, The Verge reported. Jessica Caldwell, director of insights at automotive resource Edmunds, told The Verge that approximately 13 percent of people who purchased a new car in April 2021 paid more than the sticker price. "Prices are just soaring," Caldwell told the outlet. "And as high as the prices go, it seems like it doesn't really deter people."
After noting how the demand for cars usually increases in the summer months, Caldwell said: "I imagine this year [demand] will be even higher because people are itching to go out, go places, go on road trips, go back to school."
It could take months, or longer, for the automotive industry to return to normal.
Pete Earle, an economist from the American Institute for Economic Research, told WUSA9 he suspects it'll be at least a couple of months before things are operating like usual in the car industry. "It could be a matter of months or maybe a little bit longer before things get back to normal," Earle said. Fichtner also suspects it'll take a few months for businesses to get back on track. "Optimistically, by Labor Day we'll be back to normal," Fichtner noted. "Realistically, probably by the end of the calendar year. Pessimistically, probably sometime in 2022."