Global Chip Shortage Makes It Tough to Buy Certain Cars
CR offers expert advice on how to navigate the current car shortage
So you have three choices: look at models you weren’t previously considering, hold off on buying, or fix your old car if it’s in rough shape.
Jake Fisher, director of Consumer Reports’ Auto Test Center, recommends holding off until the market has shifted in the buyer’s favor. “Now is a terrible time to buy a car, so it’s probably best to avoid it if you can,” he says.
Why Semiconductors Are Important
Semiconductors contain microchip processors, which are used in smartphones, televisions, internet routers, and even home climate control thermostats. Cars and trucks are now loaded with electronics, so they have them, too.
Sam Abuelsamid at Guidehouse Insights says that every car has at least two or three dozen microchips, which control everything from window motors and infotainment screens to fuel management and stability control. Luxury vehicles with a lot of high-tech features may have 100 or more processors onboard, he says.
Manufacturers sold more than 14 million vehicles in the U.S. in 2020, and more than 17 million the year before, creating a need for hundreds of billions of microchips annually.
The COVID-19 pandemic is the main cause of the chip shortage. When automakers shut down factories last year—both to keep workers safe and to confront a steep drop in demand for new cars—they canceled orders for semiconductors.
At the same time, demand spiked for computers and other electronic devices because people needed to work and be entertained at home. When auto factories got rolling again and sales picked up in a big way, microchip manufacturers were unable to keep up with the surging demand.
So where does that leave consumers? Abuelsamid says that companies like Intel, which haven’t supplied chips for the auto industry in the past, have offered to begin production. And big chip manufacturers like TSMC, a Taiwanese company that dominates the global semiconductor industry, are building more factories.
But Abuelsamid says it will take time for those changes to have a noticeable impact on the supply of new cars.
“It’s likely that car buyers will be paying more for new vehicles, at least through the next year and perhaps longer,” he says. “Most automakers are facing production cuts, which in turn means limited inventory of new products on dealer lots. Low inventory means reduced or nonexistent discounts and deals on new vehicles.”
Consequently, traditional discounts off the window sticker price have been harder to come by and typically smaller. In fact, Consumer Reports is seeing some cars sell for closer to the MSRP, and in some cases even a little over.
CR members can refer to our monthly best new-car deals for guidance on models that perform well and have notable discounts. Insights on local transaction prices—key information for negotiating—can be found on the car model pages.
The silver lining is that now is a good time to sell a car if you’re not using it much because of the pandemic. Rising prices on new cars have pushed many consumers toward used cars, making them scarcer and more expensive as well, analysts say. In other words, it’s a seller’s market.