When will the chip shortage end?

[Anonymous]

Planning to purchase new car…title says all…

[Anonymous]

Why would it end?

Prices (and dealer mark-up!) stay high, inventory stays low, and no need for factory incentives to clear out previous year’s models and the end of season.


It’s a perfect formula for permanently boosting revenue for manufacturers and dealers alike.


Get used to it.

[Anonymous]

Yea, but eventually the manufacturers will try to compete by lowering price. This is why capitalism will tend to move towards lower margins unless there are distorting factors (government mandated shutdowns). Note that distorting factors is not used in a derogatory sense here. It's just common nomenclature for describing when the normal economic process deviates from the most efficient path. We are a mixed economy, deviations from efficiency is a normal feature.

[Anonymous]

Manufacturers will be in a better place re: chip supply by end of 2022. They'll be in a great place at some point in 2023.

But as supply grows, the millions of people who have put off car purchases will gradually enter the market. Tons of pent-up demand. And in January 2022 many people will return to offices at least a few days a week.

It will take a few years for all of this to settle down, and when it does:
--Most manufacturers will discount a bit below MSRP, but we'll never see the massive discounts people were previously used to (like in 2019 you could get ~$10k off an F150 Platinum)
--Manufacturers will nudge more people to "order" their cars and get them a month later, rather than stuffing dealer lots to the gills with vehicles they hope to sell. Tighter inventory management will allow automakers and dealers to better control supply and thus maintain higher margins. But it will also be a better experience for most consumers who are happy to pay one transparent price and get exactly the color/trim/options they want.

[Anonymous]

Anonymous wrote:Manufacturers will be in a better place re: chip supply by end of 2022. They'll be in a great place at some point in 2023.

But as supply grows, the millions of people who have put off car purchases will gradually enter the market. Tons of pent-up demand. And in January 2022 many people will return to offices at least a few days a week.

It will take a few years for all of this to settle down, and when it does:
--Most manufacturers will discount a bit below MSRP, but we'll never see the massive discounts people were previously used to (like in 2019 you could get ~$10k off an F150 Platinum)
--Manufacturers will nudge more people to "order" their cars and get them a month later, rather than stuffing dealer lots to the gills with vehicles they hope to sell. Tighter inventory management will allow automakers and dealers to better control supply and thus maintain higher margins. But it will also be a better experience for most consumers who are happy to pay one transparent price and get exactly the color/trim/options they want.

GM and Ram will try to eat into ford’s pickup market share and ford will respond by discounting. It’s been the same pattern for decades.

[Anonymous]

Anonymous wrote:

Anonymous wrote:GM and Ram will try to eat into ford’s pickup market share and ford will respond by discounting. It’s been the same pattern for decades.

I partially agree. There will be some discounting off MSRP in the future (yay capitalism) but nowhere near the insane 5-figure discounting of the past.

There will also be a lot more custom ordering done, and custom orders will receive smaller discounts.

[Anonymous]

It only takes one or two car companies to start offering discounts again (once inventory rebounds) and then they all will have to compete again.