Throughout the pandemic, news organizations have been reporting on the disruption of the global supply chain and its impact on consumer goods in general, not to mention the car shortage. Everything from toilet paper and home appliances to electronics and microchips has been in short supply. New and used cars are no different. What gives?
How the Microchip Shortage is Creating a Car Shortage
Today’s car industry is fueled by microchips. Nearly every safety feature, entertainment system, and people-facing convenience in a modern car or truck relies on semiconductor chips to run.
As pandemic shutdowns started to deeply impact car production, automakers simply canceled orders for parts like microchips in anticipation of a huge decrease in demand. That drop was only temporary, though. Now, manufacturers have been caught in somewhat of a self-made supply chain disruption, brought on by those order cancellations. They’ve been struggling to get car production back on track.
According to several car industry sources, the decrease in microchip supplies caused fewer vehicles to be made, which led to an inventory shortage just as demand increased. The result? Higher vehicle prices. Additionally, pre-owned vehicles recently increased in price up to 40%. While car owners could get more money for trade-ins, buying a used vehicle is now significantly more expensive.
What’s more, due to the inventory shortage and increased car prices, Second Chances Garage has seen a significant decline in car donations.
Ramping Up Chip Production to Help the Car Shortage
According to the U.S. News & World Report, chipmakers are currently working at maximum capacity. Because chips are complex to manufacture, require specific conditions for work environments, and need highly trained workers to make them, building new chip factories is extremely costly and time-consuming. So, it’s not a quick fix.
According to the Semiconductor Industry Association, it takes about 12 weeks to manufacture a standard semiconductor. Advanced chips can take up to 20 weeks to build. The estimated lead time for a new chip order is about six months!
Until more chips are available, automakers have:
- Shut down some factories.
- Stopped production of less popular models.
- Eliminated certain chips from vehicles to meet delivery schedules.
- Allowed dealers to install chips in vehicles once they’re back in stock.
The End of the Car Shortage
Even though the chip shortage is coming back to life, forecasters estimate it won’t be running smoothly until the second half of 2023, maybe into 2024. Until then, people are either settling for used cars, which are selling at premium prices, or holding onto their current vehicles for a little longer.
Vehicle Donations Are Still Needed
It’s no surprise that the car shortage is creating another hurdle for people who need reliable transportation just to get a job and can’t afford it. Reports show that car donations have dropped as much as 30% to nonprofits like Second Chances Garage.
With people struggling from circumstances related to the pandemic, soaring inflation, and other challenges, charity donations remain the lifeblood for so many in our community. There are benefits to supporters as well: You can donate to a good cause and could earn a charitable tax deduction at the same time.
Support Second Chances Garage
Recently honored with the William Donald Schaefer Helping People Award, Second Chances Garage makes a difference in our community of Frederick, MD by offering “second chances” for individuals and families on their journey to independent living by providing assistance with their personal transportation needs. We support this mission through programs:
1) Our Low-Cost Vehicle Program provides cars to eligible low-income, wage-earning individuals and families. We accept donated vehicles of any condition or mileage, repair what we can, get it MD inspected, and pass them back into the Frederick County community.
2) Our Reduced-Cost Repair Program provides affordable car repairs and maintenance to eligible individuals who currently own a car.
To help us with our mission, people will donate a car if they are able. They’ll also give funds to support a variety of needs, including: car repairs, operating expenses, parts, tools, fundraising events, and more. Learn more about other ways to support us here.