Lots are mostly empty of new vehicles!

[869 KPH]

Odd that no one saw this coming and prepared for it. Why not? What REALLY happened?
Chips used in most cars are made - not in the USA and not by Intel.

I thought it was the fault of 'just-in-time manufacturing' practices. Meaning just like you don't have a warehouse stocked with thousands of pallets of toilet paper (ha), auto manufacturers only purchased chips based on predicted demand for the final vehicle. So when auto demand dipped about this time last year, they lowered their orders. Meanwhile, everyone decided they wanted a Switch or Xbox or whatever, and so the auto manufacturers' spots got taken up by other products. Well, demand for cars is now back and suddenly there aren't enough chips to go around. Doesn't help that a few chip facilities are offline too.

In summary - I thought this was because auto manufacturers lost their place in line.

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[ShadowsPapa]

I thought it was the fault of 'just-in-time manufacturing' practices. Meaning just like you don't have a warehouse stocked with thousands of pallets of toilet paper (ha), auto manufacturers only purchased chips based on predicted demand for the final vehicle. So when auto demand dipped about this time last year, they lowered their orders. Meanwhile, everyone decided they wanted a Switch or Xbox or whatever, and so the auto manufacturers' spots got taken up by other products. Well, demand for cars is now back and suddenly there aren't enough chips to go around. Doesn't help that a few chip facilities are offline too.

In summary - I thought this was because auto manufacturers lost their place in line.

Years ago I took some business classes, and later, went to the bank with a business plan to get a loan. Worked with SBA, etc.
In all of this - and education from my son who knows Asia pretty well, and Asian manufacturing, I discovered that while American companies project out often only 5 years (I had to make a 2 year and a 5 year plan for the SBA loans) Japanese companies project out 15-20 years.
Why do we so often find ourselves behind the curve on manufacturing and business in general? Poor planning. Think of it - Korea was a poor war-torn country not that long ago, now they lead all consumer ratings in home appliances and electronics. Their products are second to none in those areas - and other areas. We are too concerned about here and now, instant return, I invest and I want 10% NOW, I don't give a rip about 15 years from now. If you can't give me a return right now I'll move my money to a place that will.
It goes back to the I want it all and I want it now thing.

I'm sure things have changed for even Korea and Japan mostly due to the influx of foreign investments (ie US investors wanting payback now) but the point is, it's another area we've done it to ourselves.

Yes, absolutely as said - just in time is a huge factor.
And the largest maker of chips for automotive use? MOST of their business by a HUGE margin, not a little, but by a factor of several times - is for CELL PHONE CHIPS.
It's so bad in that industry one of the big makers of cell phones is getting out. LG is quitting - even though not that long ago they came out with a phone that was rated as better than the competition in several areas. So your choices will be Samsung, Apple and a little pit of Pixel/Google and Motorola.

 

[IamAlan]

According to Wiki, Intel is the largest microchip manufacturer. They cannot meet demand, but are investing hugely in new facilities.

When the auto industry shut down, chip manufacturers retooled and started making chips for consumer electronics. They found it to be quite lucrative and aren't in any hurry to shut down, retool back to automotive, and make less money. So, if and when the chips return, they will no doubt be very expensive.

 

[awraynor]

Bought mine a week ago. Not exactly the one I wanted, but didn't want to chance a custom build not being delivered on time. Shortages of all brands in my area.

 

[rharr]

Pretty sad state of affairs for the country honestly. We should learn a hard lesson from it all if we make it to the other side.

The issue isn't chips in the bigger picture, it' this whole "just in time" manufacturing model aka "Lean" manufacturing. No manufacturers carry a surplus or inventory over exactly what they need for that exact moment. In the 90's they found they could save tons of dollars by ordering stuff to show up just in time for the install, and that way past some costs on to the sub vendor/manufacturer of the widget who then has to pay for the storage of the parts until the main company orders them.

Back in the day when communications sucked and computers didn't rule the world, car manufacturers bought parts in bulk based on estimated production quantities...but that cost them money and they had left overs.

most of the auto manufacturers got caught with their pants down with covid and got screwed because their vendors where shut down or didn't have the employees to stamp the widget thus couldn't meet the just in time supply schedule and everything came crashing down like dominos.

Toyota was a little better cause they saw problem ahead of everyone else and developed a robust database that tracked supply chains of vendors of vendors of vendors and can quickly assess the health of their supply chain and step in if need be to keep their end production moving along. The big 4 and many others failed.

very interesting article here if you want to know why there are no cars right now.

https://www.bloomberg.com/news/arti...ply-chain-helped-it-weather-the-chip-shortage

 

[ShadowsPapa]

Yup - Asian manufacturers try to predict the future and look ahead, not much with American manufacturers. They forecast out lot farther.

 

[jimbom]

When the auto industry shut down, chip manufacturers retooled and started making chips for consumer electronics. They found it to be quite lucrative and aren't in any hurry to shut down, retool back to automotive, and make less money. So, if and when the chips return, they will no doubt be very expensive.

I saw on 60 Minutes that TSMC (Taiwan Semiconducter Manufacturing Co.) has committed to resupplying the auto industry. To your point, they indicated that Intel isn't interested with their current capability.

 

[jimbom]

We should not be talking Intel as they aren't the supplier for automotive chips - yet. They may be made in USA for the most part - but still it's not Intel who makes the automotive chips in question.
Most auto chips are made in Taiwan. It's actually cell phones that use most of the chips made around the world.
Odd that no one saw this coming and prepared for it. Why not? What REALLY happened?
Chips used in most cars are made - not in the USA and not by Intel.

... but they certainly could be. And they may very well be in the future with all the new/additional capability Intel has in the works.

 

[ShadowsPapa]

... but they certainly could be. And they may very well be in the future with all the new/additional capability Intel has in the works.

Note I had the word "yet" in there........... with their 20 billion dollar expansion, who knows.

 

[93civej1]

The automotive industry got caught with their pants down on the semiconductor shortage. Cell phone, tablet and computer manufacturers snatched up all the chips before the auto industry even realized what was going on.

Used car market is crazy right now. Just sold my 2020 Gladiator for almost as much as I paid for it 2 years ago. Just picked up a 2021 Gladiator at a dealership that had maybe 40 cars total used/new on the lot.

You got a good deal on your trade, but how did you fair with price of the new one? I only ask, because this same thing has been going through my head.

 

[jimbom]

Just In Time is the only way to go for electronics. Can't stockpile chips that will be obsolete in 6 months.

 

[Ted Striker]

You got a good deal on your trade, but how did you fair with price of the new one? I only ask, because this same thing has been going through my head.

Not as good as a deal as I had on the 2020 that I bought 6% below invoice when I ordered it in 2019. They only came off the sticker a few thousand, but I also went down a model from a Rubicon to a Texas Trail Edition, so sticker wasn't near as much.

 

[jorbasaurus]

The Chevy/Toyota lots around me had a total of 1 used zr2 and 1 used taco trd pro, no new models between them. I really wanted a Gladiator anyways, pulling up to a nearly full lot of JTs with a great deal on an Overland made it an easy sell to the wife. Two thumbs up!!

 

[Hadoken]

You got a good deal on your trade, but how did you fair with price of the new one? I only ask, because this same thing has been going through my head.

Not the original poster, but I’ll give you my story.
I bought my 2019 JLU for 8% under invoice and traded it in in March with 16k miles for $600 more than I paid (before tax).
Same dealer gave me 7% under invoice on the new gladiator I ordered. Took about 50 days to come in.
Sold orders are a different allocation than orders destined for the lot, so I think you can get a better deal ordering than on the lot for Jeeps atleast.

 

[Shackleton]

Lots look like ghost towns here too. It’s bad. used Car values are through the roof. I’d love to trade my wife’s car but have to find the right deal on the new one so..... probably keeping the Camry

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