The Tale of Microchips

It is an interesting time in the automotive manufacturing world. We are encountering challenges we have never seen before in any of time here at the dealership.

At the start of the pandemic in the spring of 2020, GM’s manufacturing plans, much like the rest of the automobile companies, shut down. This lasted for several weeks as everyone grappled with the new reality of COVID-19.

The problem with a shutdown of that magnitude is that it takes a long time to catch up. When facilities are running three shifts, and are producing vehicles 23-24 hours a day, and you suddenly drop to zeros across the board, that lost production essentially disappears.

You can research different numbers on Google to get an average number of cars built per day. Some plants can roll a truck off the end of the line every 2.5 minutes.

So, a shutdown of a few weeks, has a catastrophic impact on vehicles produced.

This led to pent up demand in the summer as plants re-opened, and consumers were getting excited about buying a new vehicle again.

We are still not totally caught up to where we should be, but our inventory is healthier now than it was 8 months ago.

However, the industry has now been thrown a new curveball: microchips.

You may have heard about the world-wide shortage for microchips. If not, the quick summary is that due to the increase in working and schooling from home, laptops, tablets and smartphones have been selling at an increased pace.

All these devices use microchips. And they are a profitable business for chip makers.

However, lots of things in our day-to-day life, uses microchips. Your car is one of them.

In fact, your vehicle could have 50+ microchips inside of it, all working together seamlessly to keep your vehicle running, monitored and most importantly, to keep you safe.

Unfortunately, microchips sold to car manufactures are not as profitable for the chip makers. So, you see the problem here…

And microchip production is highly specialized. It’s not so easy to just either increase production or start up a new facility.

General Motors thus far seems better positioned than many other manufacturers (Germany, the country, just made an appeal to Taiwan to prioritize chip production for their automobile manufacturers!).

Everyone has been hit. Many big-name brands are cancelling production lines because they simply do not have the tech needed to build the car.

We have our fingers crossed GM keeps building. But there is a better than average chance that eventually production will be cut on certain models and moved to others to keep the most popular vehicles flowing.

This is just one more challenge in what is becoming an incredibly challenging two years. But as a consumer what is the lesson?

If you see a vehicle you like and need, or want, regardless of the brand, and you can afford it; buy it now. Don’t wait. You may end up waiting a lot longer than you think, again.


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