The Society of Motor Manufacturers and Traders report that vehicle sales in June this year marked a 28 percent increase from last year the same month, according to the Financial Times. However, the monthly sales figure was below seventeen percent of 223,421 registered in June 2019 due to a shortage of semiconductors. With no end in sight for the worldwide semiconductor shortage, the auto sector faces serious supply issues, causing roadblocks on the path to recovery. The chip shortfall is expected to affect vehicle production levels through the second half of the year. Since microchips enhance engine performance and boost safety in cars, limited supply makes it difficult for carmakers to design the safest vehicle models. Read on to understand everything about the microchip shortage in the automotive industry.
Why the auto industry is most affected
Increased demand for consumer electronics during the lockdown period is one of the leading reasons why the auto industry has been hit hard by chip shortages. Chipmakers have shifted their focus and are delivering chips to meet the needs of consumers in the electronics market, which brings in more revenue for them than the auto sector. What chipmakers didn’t anticipate was the possibility of automakers reopening eight weeks after a pandemic-induced lockdown. So, when automakers resumed operations, chipmakers could not switch quickly and develop the type of chips needed for automobiles.
Rise in car prices
The shortage of computer chips has resulted in new vehicle supply scarcity and a spike in buying prices. But despite car prices rising, the demand for new automobiles hasn’t declined. Surging demand for new vehicles and chip shortage has forced some automakers to sacrifice various features. In addition to paying more for a new car, expect your vehicle to lack some must-have advanced safety features. For instance, several Dodge Ram pickups won’t have smart rearview mirrors as a standard feature anymore. So, when comparing car models and makes at auto dealerships, don’t look at prices only. Make sure you check other features like fuel efficiency, safety, and dependability ratings.
How automakers are coping with chip shortage
Ford, Volkswagen, Honda, and General Motors are some of the car manufacturers that were hit the hardest by microchip shortage. Some automakers have canceled shifts and closed factories temporarily. Others are diverting microchips from slow-selling models to those that are in demand, like SUVs and pickup trucks. Famous car makers have also turned to designing cars without computer chips and keeping them in storage, with plans to retrofit later.
Given that computer chips enhance engine performance and boost safety, automakers cannot produce safe and reliable cars without them. That’s why the shortage of chips has resulted in low vehicle production and a rise in car prices. Automakers have also decided to sacrifice some features that require chips to meet consumer demands.