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Anyone in the auto industry?

jlong17

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Jan 21, 2019
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246
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'Merica
I just sold my ‘19 Toyota Tundra because we will be getting a travel trailer this fall and will need a bigger truck to tow it. I saw how crazy used truck prices were right now and decided to take advantage of it. I was able to get more than I paid for it 2 years and 20,000 miles ago! Crazy.
Anyways, I’m wondering if there is anyone in the auto industry on here that might give some insight into this chip shortage? Is the end in sight? Will prices level back out? I’m in no hurry to buy a truck. I’m hoping to do the ole sell high, buy low thing. It could totally backfire and I’ll pay a premium for a 3/4 or 1 ton pickup. Thanks in advance!
 

thebestusernamesaretaken

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Feb 19, 2021
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Yes, I'm in the auto Industry:

It's not just the chips, it's a lot of parts. Kind of the best way to think about it is like a rolling blackout. One moment we have all the parts we need, the next something crazy slowed everything down.

Like it or not we are in a global economy and we get all sorts of stuff from all over. Supply chains are impacted by everything from Covid outbreaks in the factory - truckers - ports ect, factory fires (chips), the pipeline of C containers used for shipping those parts and other goods are backed up because they are stuck on tractor trailers (not enough drivers), ports being backed up because of those c containers (can't put it on or take it off a ship if you don't have a method to ship containers back), and then the Suez Canal gets stuck.

As the nation rolls out of Covid protocols and folks driving habits begin to change back towards what it used to be; there has been an increased demand for vehicles (especially 4 wheel or all wheel drive units). Due to Covid, tons of people relocated out of the city and moved into suburbs or more rural areas and need trucks. BTW, this drove up the prices of trucks as well as home values without a chip issue.

From Automotive News: It took 11 weeks of microchip shortages before the number of vehicles taken out of North American production schedules reached 400,000, in late March. A little over a month later, the total is now approaching 800,000.

Those figures, from AutoForecast Solutions, show North America has been hit harder than any other region. The worldwide tally has now topped 2 million. AFS projects that at current rates, more than 3 million will be affected across the globe.

That's the annual output of a dozen busy assembly plants. And the longer things drag on, the higher the chances that a significant amount of lost production won't be made up.

"As scary and difficult and challenging as the early days were in COVID, the current supply shock is just as frustrating, if not more frustrating, for our team," Ford CEO Jim Farley said in our Congress Conversations interview that aired last week.

Now dealers — and consumers — are really beginning to feel it.


Chip shortages are one of the key drivers pulling pre-owned prices up. I wouldn't get rid of a four wheel drive truck now unless you really needed the money, because you will not be able to replace it for a while. There was one thing - for a couple of years, auctions have been loaded up with Ram Trucks as they come off lease or become decommissioned from rental car companies. When you see those prices go up - you will know that the market is getting tight in your area.
 
Last edited:

thebestusernamesaretaken

Active member
Joined
Feb 19, 2021
Messages
155
Automotive News: "Wholesale used-vehicle prices are setting a record this April, while retail used-vehicle prices have climbed at their typically slower rate. Here is the price appreciation so far in 2021 through April 18:"

Wholesale: Up 29%
Retail: Up 9%

  • Wholesale prices vs. previous all-time high: Up 17%
  • Consecutive weeks of rising wholesale prices: 16 weeks through April 18
1619919568674.png



Source: J.D. Power

Dealer auction prices for pre-owned units are demanding a $3,000 - $4,000 premium over $10k value vehicles. Once these vehicles get through the system, they will drive retail prices up.
 
Last edited:

jlong17

Well-known member
Joined
Jan 21, 2019
Messages
246
Location
'Merica
Yes, I'm in the auto Industry:

It's not just the chips, it's a lot of parts. Kind of the best way to think about it is like a rolling blackout. One moment we have all the parts we need, the next something crazy slowed everything down.

Like it or not we are in a global economy and we get all sorts of stuff from all over. Supply chains are impacted by everything from Covid outbreaks in the factory - truckers - ports ect, factory fires (chips), the pipeline of C containers used for shipping those parts and other goods are backed up because they are stuck on tractor trailers (not enough drivers), ports being backed up because of those c containers (can't put it on or take it off a ship if you don't have a method to ship containers back), and then the Suez Canal gets stuck.

As the nation rolls out of Covid protocols and folks driving habits begin to change back towards what it used to be; there has been an increased demand for vehicles (especially 4 wheel or all wheel drive units). Due to Covid, tons of people relocated out of the city and moved into suburbs or more rural areas and need trucks. BTW, this drove up the prices of trucks as well as home values without a chip issue.

From Automotive News: It took 11 weeks of microchip shortages before the number of vehicles taken out of North American production schedules reached 400,000, in late March. A little over a month later, the total is now approaching 800,000.

Those figures, from AutoForecast Solutions, show North America has been hit harder than any other region. The worldwide tally has now topped 2 million. AFS projects that at current rates, more than 3 million will be affected across the globe.

That's the annual output of a dozen busy assembly plants. And the longer things drag on, the higher the chances that a significant amount of lost production won't be made up.

"As scary and difficult and challenging as the early days were in COVID, the current supply shock is just as frustrating, if not more frustrating, for our team," Ford CEO Jim Farley said in our Congress Conversations interview that aired last week.

Now dealers — and consumers — are really beginning to feel it.


Chip shortages are one of the key drivers pulling pre-owned prices up. I wouldn't get rid of a four wheel drive truck now unless you really needed the money, because you will not be able to replace it for a while. There was one thing - for a couple of years, auctions have been loaded up with Ram Trucks as they come off lease or become decommissioned from rental car companies. When you see those prices go up - you will know that the market is getting tight in your area.


If you were a guessing man, when would you estimate things settling down? I’m in no hurry to buy a new truck
 

Jon.Breitbach

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Joined
Jan 29, 2021
Messages
21
Location
Butte
I repair cars/trucks. Been my experience that a modern half ton will generally do about the same towing a one ton did 20 years ago. Look at the tow capacity of a Ford ranger with the diesel and then compare that to a 3500 Chevy from 1989 (5.7 engine) the ranger is rated for more. It’s wild but brakes and gearing make all the difference. I personally use a 2500 (3/4 ton) as that’s what I have but a trailer doesn’t require a 500 hp diesel, just a calm person driving and a slower top speed.
 

thebestusernamesaretaken

Active member
Joined
Feb 19, 2021
Messages
155
If you were a guessing man, when would you estimate things settling down? I’m in no hurry to buy a new truck

If you were a guessing man, when would you estimate things settling down? I’m in no hurry to buy a new truck
I don't think that we have seen the top of the increased pricing yet. Pre-owned vehicle demand is higher due to several reasons, the chips affecting new car production is just one of them.

The chip issue will take months and will begin to cascade across several items and industry's. Just think about the residual impacts as factory's slowdown. They tend to reduce capacity as they can't produce to the demand and have to reduce costs. They can't order supplies to fill the demand because a 1 cent chip is holding them up from producing a end product. Production becomes dependent on the hardest to obtain part. Those suppliers have to adjust to the reduced orders that therefore reduce their capacity as well. This all has a domino effect. Once everything starts back up it may end up taking a bit of time to get people, parts processes and promotions back in place at each step.

The auto industry uses relatively simple chips compared to appliances, computers and TVs. If you were thinking of redoing your kitchen appliances, TV's etc.., I would get after it before the market figures out that there will be a shortage. I think that by black Friday there will be a mark up to just mark down on all electronic equipment including kids toys, but i don't know if any deals will be there. I could be wrong - large investments fix everything quicker.

I suspect that the auto demand still will wane somewhat in a similar pattern as normal, so perhaps we will be begin to see more normal trends around Oct. That may either provide some relief for new inventory levels to build and be in a good place for next spring or the lack of used product on the market may end up creating pent up demand that will continue to surge through winter.

I suppose that the good news is that the residual values of pre-owned cars will likely rise and therefore it may end up being a good time to lease a vehicle (the more projected residual value the vehicle has at the date a customer turns in the lease dictates lease payments). The time value of money may be higher on a new lease vs new or pre-owned purchase due to the increased premium prices on new and used products for now.
 
Last edited:

Wildabeast

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Joined
Mar 11, 2020
Messages
1,744
Location
NC / UT / WY
I’ve got a new truck ordered that is essentially a huge battery pack, 4 electric motors and a big computer (or several computers). They are supposed to start shipping in June, and based on where I’m at in line, I’m hopeful for Sep/Oct delivery. They’ve not indicated any expected delays due to chips or other supply chain issues. Fingers crossed... 🤞
 

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