The list of automakers cutting back production of new cars, trucks, and SUVs continues to grow. This page will be updated as new information becomes available regarding the semiconductor chip shortage of 2021.
What impact has the chip shortage had on new car supply?
Update 3/3/21: One month after we first reported on AutoForecast Solutions projected decrease in new vehicle supply, not much has changed. Many auto manufacturers are still continuing to face supply shortfalls (not enough semiconductors) to produce all of their inventory. Ford recently increased their production cuts, directly impacting the Ford Edge and Lincoln Nautilus. The total expected shortfall in new vehicles for 2021 for all automakers is projected at 1.6 million units.
General Motors announced on 3/3/21 that “it was further extending production cuts at three North American plants and adding a fourth to the list of factories hit by the global semiconductor chip shortage.”
“The extended cuts do not change GM’s forecast last month that the shortage could shave up to $2 billion from this year’s earnings. GM CFO Paul Jacobson subsequently said chip supplies should return to normal rates by the second half of the year and he was confident the profit hit would not worsen.”
Update 2/15/21: Lost production as a result of the ongoing chip shortage has totaled 680,350 vehicles. AutoForecast Solutions has increased their forecast from 1 million to 1.3 million vehicles that will not be produced in 2021 as a result of semiconductor shortage.
So far lost production is approximately 564,000 units with the prospect of almost 1 million total vehicles not being produced this year because of the existing and ongoing semiconductor chip shortage. AutoForecast Solutions
What manufacturers are cutting back production?
Brands impacted so far:
- Ford – Especially their new 2021 Ford F-150
- Toyota – Especially their 2021 Tundra
- Stellantis which includes
- VW Group which includes
Kia announced at NADA that they will not be limiting production as a result of the chip shortage.
What impact is the chip shortage having on vehicle prices?
From Black Book, “We are hearing more each week in the market about reduced inventory in the pipeline for Q1.With new car manufacturing facing supply chain struggles due to the microchip shortage, as well as a possible additional round of stimulus, the expectation is that pricing will remain strong throughout Q1 and into Q2.”
Other data from Black Book shows a recent increase in wholesale used car prices. As a result of limited new car supply we are seeing used car prices increase as well.
When will the chip shortage end?
No one knows for certain, but many representatives from the largest semiconductor companies have provided guidance that production increases will not meet demand until Q3 of 2021 at the earliest.
From Reuters, “TSMC, the world’s top contract chipmaker, said it was “expediting” auto-related products through its wafer fabs and reallocating wafer capacity. It now expects to lift capital spending on the production and development of advanced chips to between $25-28 billion this year, as much as 60% higher than the amount it spent in 2020.”
Can I still get a good car deal?
Yes. The tactics used before the global chip shortage to negotiate a good car deal still apply today. Will you be able to purchase a vehicle at a similar discount compared to a month ago? No. Will you be able to negotiate a fair deal based on the current market conditions? Yes.
Is now a good time to sell my car?
Yes. Used car wholesale prices are just beginning to climb after 20 weeks of declines. If you have a vehicle that you are looking to sell we strongly recommend you get a quote from Carvana, Vroom, and CarMax. Take the highest quote you receive to your local dealership and ask them to beat it. If they don’t, sell it to the highest bidder.
We anticipate that wholesale used car prices will continue to rise for the coming weeks and months. With that in mind, you may want to get a quote today for your vehicle and then wait ~4 weeks to see if it has appreciated more.
My lease is coming due, should I buy it out?
Most likely yes. If your lease is coming due over the following 2-4 months it is likely that you will be in the rare position of having “positive equity” in your vehicle. Because used car prices are increasing, it may make sense to purchase your vehicle at the residual value set 3 years ago.