The worst crisis for automakers in 50 years has left dealerships with little to sell as prices soar for consumers
The fundamental problem is the same across the country – a global shortage of computer chips that has forced automakers to cut production, causing shortages of new and used vehicles. But the situation looks particularly offensive here, say the Detroiters.
“It’s a car-making city. There shouldn’t be a shortage of cars,” said Benyam Tesfasion, a taxi driver who has been busy ferrying travelers from the airport to pick up rental cars 10 or 20 Another feature of his daily commute, he says, is passing giant parking lots where automakers store newly made cars that are still waiting for a few final chips.
The Detroit experience shows how the nearly two-year-old semiconductor shortage has upended manufacturing and forced change in one of America’s most beloved consumer markets.
“This may be the biggest disruption we’ve seen since the 1970s and the fuel crisis,” said Matt Anderson, transportation historian at the Henry Ford Museum complex in Dearborn, referring to the tumultuous period that forced automakers to produce more fuel. performance vehicles.
The chip shortage “is the kind of thing that I’m sure my successors will study in the years to come,” he added.
Used car market in chaos as prices soar
Gone are the days when buyers could drive to a dealership and drive home in a cherry red convertible with their favorite features. Buying a car now means placing an order and waiting, sometimes months, for the arrival of the vehicle.
The days when buyers could rely on affordable wheels are also over. The average US price of a new car has risen 20% over the past two years, to $45,975, according to data provider Cox Automotive. The average used car soared even more — by 40%, to $28,012.
These spikes have been a major factor fueling inflation, which hit a 40-year high last month. A new car is increasingly “a luxury item for the wealthy,” said Charlie Chesbrough, senior economist at Cox Automotive. “For a household of $60,000 or $70,000 a year, you can’t afford a new car.”
The global auto industry produced 8.2 million fewer vehicles last year than it would have without the chip shortage, according to consultancy AlixPartners. And the outlook for 2022 remains bleak, with automakers expected to sell just 14.4 million new cars in the United States, down from around 17 million in 2019.
A year ago, Chevy dealership Paul Zimmermann had about 700 new cars for sale at his lot just outside Detroit. Today there are about 25.
Before, “if you were a customer, you could go see a Black Blazer or a Silver Blazer. White. One without sunroof. One with a sunroof. Now there are hardly any left,” said Zimmermann, who bought the dealership in February 2020. “So there is really no possibility of shopping in person.”
This changed everything in the operations of the dealership, called George Matick Chevrolet, which opened in 1967 and ranks among the largest Chevy showrooms by square footage in the United States.
Instead of showing up to browse available vehicles, customers now place orders and wait, sometimes for months, for their cars to arrive. Instead of working in the showroom, sales staff now spend hours tracking their customers’ vehicles online, looking to see when they roll out of production and become available for pickup.
On a recent Monday morning, the dealership had 183 cars in General Motors’ system that were nearly complete but still missing some final components. GM coined a new term for these, Zimmermann said — “build shy” — because they’re built shy of parts.
It changed the process of buying a car, which is often an emotional decision, Zimmermann said.
“There’s always a lot of desire to have that tactile experience, you know, of touching, feeling, feeling, testing driving,” he said. Customers ask, “Do you have one where I can just come and sit?” Do you have one where I could just take her for a ride? Do you have one where I can just watch it? »
“In the absence of that,” he said, “I think it prevents some people from actually making the decision.”
The Detroit Pistons haven’t played at the Palace of Auburn Hills, a suburban arena, since 2017, and the building itself was demolished in 2020. But the parking lot on a recent Thursday was occupied by about 2,000 trucks GM newly built Chevy dealers said were missing chips. Security officers declined to comment.
Asked about the lot, David Barnas, a GM spokesman, pointed to the company’s recent announcement that chip shortages and other disruptions had left it with 95,000 unfinished vehicles, which it aims to complete and for sale to dealers by the end of the year. GM is holding the vehicles “in secure lots” near its factories, Barnas said. In the long term, the company is working to reduce the number of unique semiconductors it needs to ensure more reliable supplies, he added.
Similar fleets of unfinished cars are hidden throughout the Detroit area and beyond. An auto industry executive said he recently saw thousands of trucks parked around a GM plant in Silao, Mexico. A former factory worker told him that the vehicles were missing chips.
In recent days, many behind a low-rise office park near Ford’s Dearborn headquarters housed about 50 F-150 trucks with new-vehicle stickers attached. Security officials told The Washington Post that Ford owned the vehicles and that the lot, which holds about 1,200 cars, was full days earlier.
Ford spokesman Said Deep did not respond to questions about these trucks, but said “the entire industry has been dealing with global raw material issues and chip issues for over two years. “.
“We continue to work to deliver our vehicles to our customers as quickly as possible. … It stays fluid,” he said.
The problem affects most car manufacturers. Tesla was the only major company to increase U.S. sales year-over-year in the first half of 2022, with Honda, Nissan and Volkswagen all suffering declines of more than 30% largely due to power issues. supply, according to Cox Automotive.
Shortages are forcing Detroit-area buyers to compromise, even those who spend their days building cars for a living.
Ahyana Elliott, a factory worker at a Chrysler plant on Detroit’s east side, is on the hunt for a new vehicle. A car enthusiast since childhood, she already owns two Corvettes and a Camaro but wanted a “winter car” that could handle Michigan snow, she said as she browsed the vehicles at Bob Maxey Ford, a dealership from downtown near the Detroit River.
“My dad said, ‘Never have a reason why you can’t go to work. If one car won’t start, get another,” said Elliott, who spends his free time meeting other car enthusiasts at the local Corvette Club.
She had her sights set on a new Ford Bronco but heard the wait could be a year or more. So she is now looking at used cars instead, but the high prices and rising interest rates are giving her a shock. There’s not a lot of choice on dealer lots either.
“It’s awful. There’s nothing available,” she said.
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At a Chevy dealership in suburban Auburn Hills, Lauren Fisher was set to buy out the lease on her Equinox SUV rather than try to brand a new car.
“With the car I’m renting now, I have everything I want: leather seats, sunroof, heated seats and steering wheel,” she says. “If I were to rent this again, I guarantee you I wouldn’t find it. I’ll get it built or it’ll take forever to get it.”
Labor shortages and scarce supplies of non-chip materials are also stalling production for automakers and suppliers, but chips are the most stubborn problem, industry executives say.
When an automaker misses a piece of the puzzle, it can suddenly shut down production and force dozens of suppliers to shut down their factories, leaving everyone frustrated, said Thomas Kowal, president of Seraph, a global consultancy with Troy , Michigan, offices that have been busy advising automakers and suppliers on how to handle shortages.
An automaker might suddenly say to suppliers, “Hey, we don’t need to start production on Friday,” Kowal said. Then, on Saturday, it could require suppliers to transport their workers to produce parts over the weekend. “It’s like it’s a yo-yo, constantly,” Kowal said.
Uber driver Ljupco Stefanovski, who worked as a porter at a Chrysler factory, said he witnessed the disruption when driving Ford employees to and from their shifts at a factory in Wayne. Sometimes when he picks them up, they say they’re sent home sooner. “There is no chip, no work,” they tell him.
Some auto executives are also paying attention to fleas. “A few months ago I was driving a guy – He worked for Ford, he worked for Kia, Hyundai,” recalls Stefanovski, who immigrated to the United States from North Macedonia. “He said, ‘Why don’t we build [chip] factories here, so we’re not going to have this problem? » ”
Stefanovski rents his car through an Uber program because he can’t afford one.
“You can’t even think about buying the car anymore – even the used car is going up 40%,” he said. “These two, three years, everything is like upside down. It’s not the same anymore.”