Semiconductor chip shortage creating higher car prices
Semiconductor Chip Shortage
A global semiconductor chip shortage is driving up demand and car prices. Demand for chips is outstripping supply. This shortage is creating delivery backlogs for new vehicles and it may be some time in 2022, possibly January or February before the situation is resolved.
The situation has been getting worse and it is really creating a sellers market with companies such as Ford making better-than-expected profits due to the higher vehicle prices.
Ford has said that their second-quarter operating profits have exceeded their expectations. Profits are much higher because manufacturers have had lower costs to deal with while at the same time seen vehicles rising in prices.
Ford Motors, which is headquartered in Dearborn, Michigan said the chip shortage would cost it $2.5 billion in 2021 and that only half the usual vehicle numbers will be built in the second-half of the year.
Ford has been hit harder than any of the other manufacturers after chip production was halted due to a fire at a Japanese plant of Renesas Electronics Corporation.
The chip shortage leads to lower vehicle inventories, which, in turn, causes higher consumer prices for new cars. Cars are not the only things that are affected by the shortage. Samsung and LG said last week that the chip shortage is also hitting the production of televisions and appliances.
The automotive sector, which relies on chips for everything, has been the hardest hit. As well as Ford, other car manufacturers likeVolkswagen and Jaguar Land Rover have shut down factories, laid off workers and slashed vehicle production.
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