The Automotive Market ‘Is Insane’: Sellers Cannot Hold Up With Demand

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Some customers have shied away from paying the top dollar for new cars and have opted for older vehicles. That has increased the demand for parts and service, one of the most profitable businesses for car dealerships. Many dealers have extended workshop hours. Mr. Ricart said that some repair technicians put in a 10 or 12 hour day three or four days in a row before taking a few days off.

Of course, the car shortage will end, but it’s not clear when.

As Covid-19 cases and deaths increased last spring, automakers closed plants across North America from late March to mid-May. With their factories closed and expecting sales to slowly decline, they ordered fewer semiconductors, the tiny brains that control motors, gears, touchscreens, and many other components of modern cars and trucks.

At the same time, consumers who stayed at home began buying laptops, smartphones, and game consoles, which increased the demand for chips from companies that make these devices. When the automakers restarted their plants, fewer chips were available.

Many automakers had to shut down plants for a week or two straight in the first half of 2021. GM, Ford Motor, and others have also resorted to making vehicles without certain components and keeping them in factories until the required parts arrive. At one point, GM had about 20,000 nearly complete vehicles waiting for electronic components. Shipping started in June.

Ford was hit harder than many other automakers by a fire at one of its suppliers’ plants in Japan. As of the end of June, Ford had about 162,000 vehicles in dealership locations, less than half the number three months ago and about a quarter of its typical dealer inventory.

This month, Ford is slowing production at several North American plants due to chip shortages. The company planned to focus on completing vehicles.

Mr. Ricart recently took a ride on his Harley-Davidson to Louisville, Kentucky, and looked at the trucks and SUVs at a Ford plant waiting to be completed. He said he had “seen thousands of trucks in fields with temporary fences around them”.