If you’ve visited a car dealership in the past year, then it’s likely you’ve seen lots of lots looking pretty vacant. And, if there were vehicles there, they were simply waiting for their buyers to pick them up.
This strange situation has many people asking, “Where did all the cars go? Furthermore, why is every car so expensive?”
Not only is the supply scarce, but the prices have gone through the roof. To investigate this issue further, BenchForce, a leader in automotive bench programming components, explains what caused this mad dash to buy cars, why dealerships are running low on stock, and where the industry goes from here.
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A Surplus Of Cash Meets A Shortage Of Chips
The Covid-19 pandemic has impacted every industry, from hospitality to automotive retail services. But, while some sectors nose-dived, others skyrocketed. The car dealerships happened to enjoy the latter.
Between rock-bottom interest rates and government stimulus, Americans went on a buying frenzy that has continued into 2022. Across the country, showrooms and car lots are out of stock. To compound the issue of limited supply, automakers can’t increase production due to a massive computer chip shortage.
As one might expect, the pandemic played a leading role in this chip shortage. The inception of this shortage was at the beginning of the pandemic when automakers closed factories for weeks. Because production slowed, just-in-time (JIT) manufacturing strategies dictated that it was time to cut back on computer chip orders. But, while automakers’ orders dwindled, consumer demand was booming. The shift to working from home, and living more at home, caused a massive surge in laptop, smartphone, and game console sales.
When automakers resumed production, computer chip manufacturers didn’t have the stock or capacity to sell or create automotive chips to keep up with demand. Additionally, U.S.-imposed sanctions inspired Chinese technology companies to stockpile computer chips. For instance, companies, such as Huawei, which bore the brunt of those sanctions, have over two years’ worth of critical computer chips.
Car Prices Are Sky High
Depending on when you bought your last car, you may have received a call from your dealership. This call wasn’t to persuade you to buy another vehicle. Your car dealer was likely asking you if you’d like to sell back the one they sold you. That’s because used car prices have spiked up 45 percent between 2020 and 2021. Because of the shortage and demand, new car and truck prices are also up around five percent year over year.
Some automakers are doing away with certain features, such as heated seats, digital speedometers, stop-start systems, and super-cruise, to still compete with limited computer chips. What’s more, it doesn’t seem to be stopping buyers. If the vehicle even closely meets their needs, they’re buying it at full price that day.
However, some buyers balk at the thought of paying over the asking price and opt for making the most of the current car. Those more frugal consumers are fueling a whole new demand for auto parts and services. Auto dealers and service shops are brimming with customers, extending service hours to increase capacity and increasing prices on components.
When Does It End?
Most experts agree that the computer chip shortage will last through the entirety of 2022 and likely the first quarter of 2023. As cars continue to add digital components, automotive manufacturers’ reliance on computer chips will only increase.
To increase capacity, the world’s three largest chip manufacturers are spending over $60 billion building new factories across the globe. Additionally, between 2021 and 2022, the number of new computer chip companies will triple!
The U.S. is also committed to growing the country’s reshoring chip design and manufacturing. On June 8, 2021, The U.S. Senate passed the U.S. Innovation and Competition Act (USICA) (S.1260), which includes $52 billion in federal investments for the domestic semiconductor research, design, and manufacturing provisions in the CHIPS Act. These localization initiatives should reduce the risk of future chip shortages.
Making The Most Of Used Cars
Trained technicians and auto enthusiasts alike are remapping engine control models (ECMs) in used cars. By doing so, they can increase power and efficiency. More specifically, remapping can:
- Increase fuel efficiency
- Increase acceleration rates
- Improve handling
- Fix ECM issues (e.g., check engine light, transmission complications, etc.)
- Optimize shifting
- Modify stability control systems
The list above isn’t comprehensive. However, it gives you a foundational idea of how critical an engine’s control model is and what seasoned automotive repair people can accomplish by remapping.
The Right Equipment For Programming
When you’re looking to make the most of used vehicles, it’s important to have the right equipment for the job. Many seasoned mechanics and service professionals rely on the BenchForce PowerBlock and programming harnesses to streamline the entire process.
The PowerBlock serves as a central hub for powering up an electronic control unit (ECU). They can handle virtually any bench programming, especially for OBD-II and J1939 applications. Simply connect a USB or serial laptop-to-vehicle programming interface to a PowerBlock’s OBD-II diagnostic connector and the proper BenchForce pass-through harness.
While the auto industry continues to experience shortages of both new and used cars due to a dearth of computer chips and a higher demand for pre-owned vehicles, you can ensure you’re making the best car of your car no matter the circumstances. Whether you’re a novice or a well-oiled gearhead, BenchForce is here to help you with your automotive needs. For more information, visit our website.
