Table of Contents
- 1 Customers checking out a Jeep on Wednesday at David Dodge Chrysler Jeep RAM in Glen Mills, Pa.
- 2 New Ford F-150 pickup trucks parked in Detroit, waiting for computer chips to install.
- 3 Share Your Thoughts
- 4 Danyelle Anderson has worked three years at Ford’s assembly plant in Chicago, where a shortage of computer chips stalled production and triggered temporary layoffs.
- 5 Customers waiting at the National rental agency in the Miami International Airport last month.
- 6 Doug Wiebe, assistant used car manager at David Dodge Chrysler Jeep RAM, walking through an empty lot in Chester, Pa., that used to hold as many as 300 vehicles.
Americans are shopping for cars in near-record numbers, but the world’s computer-chip shortage has left dealers with the fewest offerings in decades.
The market mismatch is driving up prices, and many buyers expecting to drive new cars off the lot have to wait weeks or months for their vehicles to arrive. Some showroom models sell for thousands of dollars over the sticker price.
“We may just be in the greatest new-car market of our existence,” Philadelphia-area car dealer
said, “and we’re doing it with no cars.”
He recently woke up at 3:30 a.m. in a cold sweat and scrolled an iPad to check on his inventory of Jeeps and Ram trucks. After posting his best months ever in March and April, Mr. Kelleher was heading into the busy summer sales season with 98 vehicles on his lot instead of the usual 700.
“That really shook me up in a bad way,” he said. “This is going to be longer and more difficult than most people think.”
Auto makers have been forced to cut production of more than 1.2 million vehicles in North America because they can’t get enough chips that are used for everything from safety systems to brakes and engines, research firm AutoForecast Solutions estimated. That has turned car lots into a sea of bare asphalt.
Dealers had fewer than 2 million vehicles on the ground or en route to stores at the end of April, roughly half the normal number and the lowest level in more than three decades, according to research firm Wards Intelligence.
General Motors Co.
dealers have taken their frustrations straight to Chief Executive
“I’ve got them sending me pictures [showing] that they have virtually nothing on the lot,” the CEO told analysts last week. GM has been in daily contact with dealers about inventory and the company’s plans to make up lost production once the chip shortage subsides, a spokesman said.
Chip makers are set to spend billions on new capacity, and the White House has prioritized increasing domestic chip production, but building new plants will take years. Many auto executives expect the shortage to affect their businesses through the rest of the year.
For now, the lack of computer chips has disrupted production at dozens of auto factories across the U.S., including those that have been closed for months.
Car makers are building some models without needed semiconductors and parking them until chips are available to install. Tens of thousands of these vehicles sit at airport lots, a quarry, a racetrack and other makeshift holding pens near assembly plants in the South and Midwest.
Super Duty pickup trucks parked bumper to bumper awaiting chips dotted the grounds of the Kentucky Speedway a few weeks ago, about 50 miles from a Ford factory in Louisville where they were built. At the end of March, Ford had more than 20,000 vehicles parked near company factories while waiting for chips, a spokeswoman said.
The timing couldn’t be worse. Shoppers flush with savings and federal stimulus checks are clamoring to buy. Auto makers posted one of their best ever two-month stretches of U.S. vehicle sales in March and April.
Demand has pushed the average price for a new vehicle to $37,572 in April, up nearly 7% from a year earlier and a record for the month, according to research firm J.D. Power.
To get around inventory shortages, some car companies are dropping certain features that require scarce computer chips.
NV has shipped some Ram pickup trucks to dealers without an electronic blind-spot detection system, Mr. Kelleher said. One buyer was so upset his new $60,000 truck lacked the feature that he walked, Mr. Kelleher said. The man returned hours later. No one else had the trucks.
“Stellantis employees across the enterprise are finding creative solutions every day to minimize the impact to our vehicles so we can build the most in-demand products as possible,” the company said in a statement.
GM said it was building some full-size pickup trucks without software that helps manage fuel consumption, reducing miles per gallon. “By taking this measure, we are better able to meet the strong customer and dealer demand for our full-size trucks,” a spokeswoman said.
Have you tried buying a new car in the past few weeks? Join the conversation below.
Shortages are stoking an already hot used-car market. Dealership service managers are begging customers to trade in their cars to beef up used-car inventories, one way to offset the new-car deficit.
A used pickup truck sold for 78% more in April than a comparable truck a year earlier, according to auction site Manheim.
This should be a boon for car owners like
He recently looked into replacing his Jeep Wrangler and found used-car retailers Carvana and Vroom were willing to pay him slightly more than the roughly $50,000 he paid for it three years ago. The trouble is finding a replacement.
“The caveat is that it’s a terrible time to buy a car,” said the 42-year-old director of information technology in Houston. He decided to keep his Jeep.
The chip shortage has left factory workers to sit home, watching bills pile up while trying to navigate state unemployment offices stretched thin in the pandemic.
One of them,
is a single mother of four who has worked at Ford’s Chicago assembly plant for three years. She filed for benefits after the Explorer assembly line was idled on April 12. She and other plant workers said it was taking weeks to see their first check.
The delays caused Ms. Anderson to miss her rent and car payments, she said, and her cellphone service has been cut off for money owed. She expects her first check this week. Meantime, she keeps her car in the garage, afraid it could be repossessed while she is in arrears.
“It’s a waiting game and I’m losing,” Ms. Anderson said.
For smaller companies that make products for vehicle assembly plants, the chip shortage slammed the brakes on orders. Months ago, auto plants were working overtime to catch up on production lost early in the pandemic.
Ford installs small lights in the side mirrors of Explorers at its Chicago assembly plant that are made by Eypex Corp. Around the start of the year, orders were so plentiful that
president of Eypex, helped box shipments on the factory floor. The cuts on his hands are still healing, he said.
When the Chicago plant went dark in April, Eypex lost one of its biggest customers. The company’s factories now run three days a week with a workforce cut to about half from the start of the year, Mr. Martin said.
The whipsaw has been brutal for a supply chain whose complexity makes it better suited to gradual changes in production, he said: “If you cycle from one extreme to the other, it ultimately fractures and breaks.”
The chip shortage has pushed up prices for rental cars. Auto makers have sharply reduced vehicle sales to rental companies, prompting Enterprise Holdings Inc.,
Hertz Global Holdings Inc.,
and others to take the unusual step of buying low-mileage used cars from auctions and dealerships.
Hans Elder, who lives in Los Angeles without a car, said he was accustomed to paying less than $35 a day at Hertz, where he is a preferred member. He was surprised to see the cheapest rentals going for $50 a day, if there was one even available. “I was like, ‘Are there really that many people renting cars now?’ ” said Mr. Elder, a 46-year-old music executive.
‘Pits of hell’
said he has gotten so desperate for vehicles to sell he recently told his service staff to consider turning away some customers to focus on fixing up used cars to put on the lot. Early this month he had less than a third of his usual new-car stock at his Chevrolet-Cadillac lot near Charlotte, N.C. He isn’t optimistic.
“I figure we’ll hit the pits of hell by middle of June in terms of new-car inventory,” said Mr. Burns, who also sells the Ford brand.
a 42-year-old general contractor, ordered a new GMC Sierra pickup truck four months ago. He has no idea when it will arrive, he said, and is on the verge of giving up.
“I’m absolutely aggravated,” said Mr. Bates, who lives in the Salt Lake City area. “GM has 100 commercials going on for two or three months, truck month this, that and the other…yet nobody can provide a truck.”
A GM spokeswoman declined to comment on Mr. Bates’s wait.
EEI Global Inc., a marketing firm that provides test drives of new vehicles at such events as car races and state fairs, had an auto maker cancel a roughly $1 million contract last week because of the shortage, said
the company’s chief executive officer.
“They can’t produce the vehicles they’re trying to market,” Mr. Gentile said. “Why would you market things you don’t have inventory to sell?”
A GM factory near Kansas City, Mo., that makes the Cadillac XT4, a compact crossover SUV, has been closed since February, while the company shuffles chip supplies to install in more popular models. Stocks of the XT4 fell to around 2,000 nationwide in April, less than a third the normal level.
owner of a Cadillac dealership in Miami, said has seen XT4 models priced at $5,000 above the sticker price.
drove more than an hour from his Oregon home to buy a Subaru Crosstrek sport-utility vehicle. When he arrived at the dealership, the salesperson told him the car he was promised had sold.
His new-car hunt took him to other dealers, he said, but staffers wouldn’t let him test drive cars without cash in hand or a prequalified loan. “Everything is being guarded as if it’s made of pure gold,” Mr. Arwood said.
Write to Mike Colias at [email protected], Ben Foldy at [email protected] and Nora Naughton at [email protected]
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