Why the Semiconductor Shortage Is Negatively Impacting Your Favorite Car Brands

In 2020, Chrysler saw a 14% drop in deliveries of Jeep vehicles amid pandemic shutdowns and decided to ration semiconductors for more profitable brands. Now, it seems the company doesn’t have much choice in the matter. A semiconductor shortage is affecting numerous big car brands, and it could impact your favorite car brands, too. Let’s take a closer look.

A recent global shortage in semiconductors, which is a chip used in automobiles for critical functions like sensing, safety features, power management, displays, and vehicle control, has left major auto manufacturers in a bind. The shortage comes as a result of production delays throughout the communities where the chips are normally manufactured. COVID-19 outbreaks have halted production in numerous facilities and many auto chiefs believe that these delays will last for the rest of the year.

One unpleasant side effect of the shortage in semiconductor chips is a swell in car prices. Since semiconductor chips are in such high demand for automobile production, the current shortage has created a serious bottleneck. With fewer cars able to be manufactured, there simply may not be enough supply to meet consumer demand. As a result, car prices will likely continue to swell until the shortage is under control.

According to auto manufacturing leaders, it’s possible that the semiconductor chip shortage could have effects on the automobile industry that could last for the next two to three years.

This prediction means that dealerships will likely have trouble filling their lots as factories suspend production until they can get the chips they need.

For consumers, this means it will likely be more difficult and more expensive to buy a new vehicle. According to Kelley Blue Book, Americans paid an average of $42,736 to buy a new vehicle in July 2021 — a record high that’s up almost $3,000 from around the same time in 2020.

If you’re in the market for a new vehicle within the next year or so, you’ll need to be prepared to pay more than normal at your dealership.