The Great Chip Shortage / What Happens Next ?

[Murphy Slaw]

Tens of thousands of new vehicles are supposedly sitting around in parking lots awaiting "chips". The car lots are bare and the salesmen are suffering. Used trucks are worth nearly what they sold for new, yet I'm seeing new Broncos every day on the road. Are only trucks affected, or is it also Jeeps and s.u.v.'s?

How does this end?

Will there be a "glut" of new vehicles being blown out for cheap? Great deals to be had for all? Or will they dribble out slowly killing any great deals. Will the used market tank with so many new ones available?

Any insight?

What say you?

 

[ThundahBeagle]

The chip shortage is affecting all cars.

I've yet to see one Bronco on the road. Persinally, I've only some Bronco Sports. Theres a big difference, though, as far as I'm concerned. Like the 85 Bronco vs the Bronco II. One is not the other.

I've seen trucks waiting on chips and I've seen trucks going to dealer lots without start/stop feature - which is fine with me. That's how they are avoiding the drought then glut - by delivering vehicles but without some of the features controlled by these chips.

I'm kinda glad for a moment to know that my truck is worth about what I bought it for over two years ago. But I know overall that's a sign of a screwed up economy and manufacturing.

It would be great if we still produced some chips and boards here in the US. Just 10 or 15 years ago there were still a lot of PCB and chip makers here in Massachusetts. A couple tyears ago, I drove through those parking lots and saw empty buildings with broken windows, which I presume will be overpriced houses soon if they aren't already.

Even if we produced chips in the states, there would still be a shortage. Nobody wants to get off their a$$ and work, so long as they are getting paid to be home. Cant even get help at a restaurant!

Ordered 50 computers back in April. They arrived this past Friday. You read that right. That's nuts! All 50 should have been provisioned and deployed by end of May. End of June the latest. Worst part is, I also cant even get a decent intern to do the mindless gruntwork on them while i do all the sys admin work. Last intern we interviewed was an hour and a half late to the interview, looking like he just came from the beach. The was a hard no for me, I'd rather do it myself if I cant depend on someone.

It's part chip shortage part labor shortage part "sellers market." So, this issue ends a month or so after unemployment benefits run out, if I'm right.

 

[Correus]

Considering depreciation why would anyone even want to buy a new vehicle.

 

[Tundracamper]

If they aren’t selling cars now, how can they afford to dribble them out. That’s a lot of inventory sitting there. My prediction is that there will be a glut of products that have been in short supply such that the prices drop. I see ammo is starting to become available again and while the prices are still quite high, they are lower than they were a few months ago - of course, there are other factors in play there as well.

So, with so few Broncos on the lots, why do I see so many commercials on TV?

 

[ThundahBeagle]

Considering depreciation why would anyone even want to buy a new vehicle.

Reliability. Status.

But the last brand new vehicle I bought was an 06 Honda Civic SI. It was a great car but that was the first and last time I will ever buy new again, unless I come into a lot of money and depreciation doesnt matter to me

 

[ThundahBeagle]

If they aren’t selling cars now, how can they afford to dribble them out. That’s a lot of inventory sitting there. My prediction is that there will be a glut of products that have been in short supply such that the prices drop. I see ammo is starting to become available again and while the prices are still quite high, they are lower than they were a few months ago - of course, there are other factors in play there as well.

So, with so few Broncos on the lots, why do I see so many commercials on TV?

Same for the home buyer market. A few months after mortgage forbearance ends, I think there will be an infusion of houses to market and I hope asking prices go down. As it is, we are seeing sold houses going for less than the asking price.

 

[Old Tanker]

Considering depreciation why would anyone even want to buy a new vehicle.

You buy a vehicle now because next year they will cost 20% more, your pay isn't going up by 20%, and the loan rate is ridiculously low compared to the inflation rate.

 

[Smileyshaun]

Actually new car lots are making record profits as soon as vehicles hit the lot they sell for way over msrp.

 

[Old Tanker]

That's because MSRP is artificially low and hasn't caught up with the market. It will.

 

[Tundracamper]

Same for the home buyer market. A few months after mortgage forbearance ends, I think there will be an infusion of houses to market and I hope asking prices go down. As it is, we are seeing sold houses going for less than the asking price.

Really? Houses in my area are selling for well over asking price with owners getting like 20 offers in the first 48 hours. I don’t see how any of this can me maintained. When interest rates start going up, then we’ll have a whole ‘nother set of issues.

 

[M Rose]

Housing here is also a bidding war. My brother just sold his house for $500,000. He was asking $400,000 and he bought it for $75,000 5 years ago.

 

[ThundahBeagle]

Yes, @Tundracamper and @M Rose , I fully agree. Housing IS a seller's market and bidding war right now, here, too. $100k over asking in some instances. And the banks wont finance houses at all of the crazy asking prices, so buyers with a few bucks are being told to pay the difference or go away. My comments about "buyers market" are meant to reflect my theory that when mortgage forbearance ends, and a lot of people who cant quite make thier nut have to make a decision, they will choose to sell before they get too far in arrears. That and an influx of foreclosures will send a surge of houses onto the market, which I hope will bring people back to thier senses and put sellers back into line.

I hope.

But, checking Redfin today, we have seen a number of houses we looked at and passed or didnt get. They show up in the recently sold section. An intriguing number of them went for less than asking price over the last month.

The curve in the other direction may be beginning

 

[Sparksalot]

Yes, @Tundracamper and @M Rose , I fully agree. Housing IS a seller's market and bidding war right now, here, too. $100k over asking in some instances. And the banks wont finance houses at all of the crazy asking prices, so buyers with a few bucks are being told to pay the difference or go away. My comments about "buyers market" are meant to reflect my theory that when mortgage forbearance ends, and a lot of people who cant quite make thier nut have to make a decision, they will choose to sell before they get too far in arrears. That and an influx of foreclosures will send a surge of houses onto the market, which I hope will bring people back to thier senses and put sellers back into line.

I hope.

But, checking Redfin today, we have seen a number of houses we looked at and passed or didnt get. They show up in the recently sold section. An intriguing number of them went for less than asking price over the last month.

The curve in the other direction may be beginning

That's the giant sucking sound of people saying Texas of Bust.

 

[Smileyshaun]

As long as lumber and other building supplies stay skyrocketing prices housing is not gonna catch up because builders and buyers have a hard time sucking up all the extra cost. I would be at least another year of rising housing prices. I do have a feeling our economy is going to take a turn for the worse because you can’t have so many businesses in need of employees and so many people collecting a free paycheck from the government before that will collapse horribly. Our poor children are going to have one hell of a bill to pay down later

 

[ThundahBeagle]

F*ck-all! Only a 9% jump might be acceptable! Its nuts here. I'd try and find the numbers but I fear I am treading too far off topic and my posts might get deleted.

I'll get back on topic for the rest of my responses. Chip shortage = bad.

 

[M Rose]

One cool thing about the chip shortage… it’s bringing jobs back to the American soil. I know of a couple companies that have started ramping up micro chip production here in the US. It will be interesting to see what the prices and quality will be compared to what was coming out of Japan.

 

[ThundahBeagle]

Well over 20% increase here. In some spots 30 or more.

Chip shortage sucks, though. I've got to spend the next month provisioning desktops and laptops for deployment.

I couldn't caress about start-stop, though. I was always told that most engine wear occurs when starting, and I cant imagine a lot of fuel is saved. Maybe I'm wrong on both counts

 

[Murphy Slaw]

Considering depreciation why would anyone even want to buy a new vehicle.

I like to keep the wife in a dependable vehicle.

You get the first 100,000 miles with just oil changes and tires, no real issues. We do it often.

 

[Murphy Slaw]

I couldn't caress about start-stop, though. I was always told that most engine wear occurs when starting, and I cant imagine a lot of fuel is saved. Maybe I'm wrong on both counts

I would HATE it and have to figure a work-around.

Starters ain't cheap...

 

[Anak]

Micron still makes chips in this country. They have several different locations where they make them.

Funny thing about the automakers, they have been trying to beat prices down as if there were a glut of chips and low demand. It's a great way to get your allocation reduced in favor of some other industry who actually gets it and who buys more than you do anyways.