Car prices likely to keep rising due to C-19 surge-induced parts shortages

AP has reported that the hope we felt in the spring of an ease in soaring car prices is dimming. A shortage of computer chips coming from several Asian countries seemed to be improving as the COVID-19 pandemic seemed to wane.

But the surge in COVID-19 cases from the delta variant in countries that are the main producers of auto-grade chips is worsening the supply shortage. It is further delaying a return to normal auto production and keeping the supply of vehicles artificially low. And that means, analysts say, that record-high consumer prices for vehicles — new and used, as well as rental cars — will extend into next year and might not fall back toward Earth until 2023.

The global parts shortage involves not just computer chips, AP said. Automakers are starting to see shortages of wiring harnesses, plastics and glass, too. And beyond autos, vital components for goods ranging from farm equipment and industrial machinery to sportswear and kitchen accessories are also bottled up at ports around the world as demand outpaces supply in the face of a resurgent virus.

Squeezed by the parts shortfall, General Motors and Ford have announced one- or two-week closures at multiple North American factories, some of which produce their hugely popular full-size pickup trucks.

In late August, shortages of semiconductors and other parts grew so acute that Toyota announced it would slash production by at least 40 percent in Japan and North America for two months. The cuts meant a reduction of 360,000 vehicles worldwide in September. Toyota, which largely avoided sporadic factory closures that have plagued rivals this year, now foresees production losses into October.

Nissan, which had announced in mid-August that chip shortages would force it to close its immense factory in Smyrna, Tennessee, until Aug. 30, now says the closure will last until Sept. 13.