Projections for 2022 Inventory Issues in the Auto Industry

What’s Happening with Manufacturers

COVID-19 has had a massive negative impact on the automotive industry, specifically in the production of new vehicles which has left the industry in an inventory drought. While it was hopeful at first that the industry would correct itself by 2022 many are realizing that, much like COVID-19 itself, this issue is going to last longer than any of us could have anticipated. The following is a brief forecast of what we can expect our 2022 to look like.

The Microchip Shortage

As most of us know, the microchip shortage has been the real cause for the overall inventory drought. To give you an idea of just how badly this chip shortage has impacted the market, it is estimated by Seraph Consulting that by the end of the chip crisis, which is projected to be the beginning of 2023, there will be $450 billion lost in global auto sales. With those numbers, that means that over the next two years there will be 15 million fewer cars built overall.  

Brands like Ford have been hit especially hard because their main supplier of microchips (Renesas Electric) had a fire at their production plant. Ford’s car production as a result has been down a staggering 33% in 2021.

The chip shortage was well on its way to correcting itself early summer of 2021, but the arise of the Delta variant of COVID-19 forced several plants in southeast Asia to close, thereby worsening the shortage yet again.

In response several different American car manufacturing plants have halted production because they have a surplus of vehicles built, stored away and ready for the microchips to be installed but it doesn’t look like the microchip manufacturers will be able to truly catch up until well into 2022, if not 2023.

Used Car Market

This incredible shift in new car production has caused dealerships to focus more intensely on selling and purchasing used cars. The U.S. Bureau of Labor Statistic’ Consumer Price Index had determined because of this sudden value spike in used cars, their prices have jumped a significant 39.8% since March 2020.  

The CEO of AutoNation, Mike Jackson, comments, “consumer demand continues to outpace supply, driven by consumer desire for personal transportation and ongoing manufacturer supply chain disruption.”  

This is a trend that is far from over based off of the data concerning the microchip shortage. Sales pro are having to learn how to sell their customers on choices they didn’t come in for because they just simply don’t have the supply. Buckle up and get ready to weather this storm for a good time longer.





About the Author: Sky Intrieri