New Vehicle Sales Plunge as Chip Shortages, Production Cuts, Low Inventories Drag On. Back Where They’d Been in 1979

Toyota, whose sales plunged less than GM’s and Ford’s, was #1 in Q1.

By Wolf Richter for WOLF STREET.

Amid ongoing chip shortages and other shortages, production halts, and depleted inventories on dealer lots, auto sales in the US, as measured by the number of vehicles delivered to end users, plunged 25.9% in March compared to March last year, and by 22% compared to March 2019, to 1.25 million vehicles.

In Q1, sales fell by 15.8% from Q1 2021 and by 17.7% from Q1 2019, to 3.28 million vehicles, the worst Q1 since 2011.

In terms of the number of vehicles sold, the auto industry hadn’t grown in two decades before Covid, with the huge trough of the Financial Crisis in between. But since early 2021, supply-chain issues dogging the industry have been triggering on-and-off production halts at various plants around the world. And these production halts are continuing into April – though automakers are saying that components are starting to flow a little better. Q1 sales were right back where they’d been in 1979.

What has kept the industries revenues growing over the decades are higher prices, and this is hugely important now, with unit sales down so far. Higher retail prices are a mix of factors: More expensive models, higher MSRPs, and lower incentives by automakers. Multi-decade low incentives by automakers contribute to the weird phenomenon that many buyers are paying over sticker.

Buyers spent $45.7 billion on new vehicles in March, according to J.D. Power estimates. But this was down by $6.2 billion from March 2021, as higher prices alone weren’t enough to overcome the plunge in sales.

Production keeps getting slammed. For example, today GM halted production of its Chevrolet Silverado 1500 and GMC Sierra 1500 at the Fort Wayne Assembly plant in Indiana for two weeks due to the semiconductor shortage.

When GM announced the plant shutdown last week, it said that chip supplies have improved so far this year. But there’s “still uncertainty and unpredictability in the semiconductor supply base, and we are actively working with our suppliers to mitigate potential issues moving forward.”

GM also said that production at its Lansing Grand River plant will be halted all week due to supply chains issues this time unrelated to semiconductors. The plant makes the Cadillac CT4, Cadillac CT5 and Chevrolet Camaro.

Ford halted production for the whole week, starting today, at its Flat Rock Assembly Plant in Michigan, due to the semiconductor shortage. Production at the plant, which produces the Mustang, was already halted multiple times this year.

Toyota said that it would cut global vehicle production by 17% in April. Other automakers have similar supply chain problems.

Toyota reported on Friday that in March it sold 194,178 vehicles, down 23.5% year-over-year. In Q1, it sold 515,592 vehicles, down 14.7% year-over-year. Despite the massive drop, these sales plunged less than the sales of GM and Ford, and this made Toyota the largest automaker in the US for Q1, a hair ahead of GM.

GM, which reports sales only quarterly, said on Friday that its Q1 sales plunged by 20.1% year-over-year to 512,846 vehicles, with retail sales dropping further, and fleet sales rising 10% year-over-year. This put GM once again behind Toyota.

GM said that production has increased since to the end of September. Inventory on dealer lots and in transit have risen to a still very low 273,760 vehicles, but that was up from 128,757 units at the end of Q3 last year, and up from 199,662 vehicles at the end of Q4. GM expects inventories to “remain relatively low,” it said.

Ford reported today that its sales in March plunged by 25.6% year-over-year to 159,328 vehicles. Fleet sales (mostly to rental fleets) picked up, but retail sales plunged 30.1% year-over-year. For Q1, sales plunged by 17.1% to 432,132 vehicles

Given the inventory shortages, customers have taken to ordering vehicles and waiting for months. Ford said that retail customers ordered 50,000 F-Series trucks in March. F-series deliveries in March, given the supply issues, were only 44,906, including fleets. In other words, Ford’s backlog of F-Series retail orders grew during the month.

FCA, a unit of Stellantis, reported on Friday that its sales in Q1 plunged 14% to 405,221 vehicles. FCA owns the Chrysler, Dodge, Jeep, Ram, Fiat, and Alfa Romeo brands. By having plunged only 14% in Q1, sales outperformed the industry, “despite being impacted by the existing supply chain constraints facing our industry,” it said.

Tesla doesn’t report US sales at all. It only reports global sales, which jumped 68% to 310,048 vehicles in Q1, thanks to its new factory in Shanghai, “despite ongoing supply chain challenges and factory shutdowns,” Tesla said. For Q2, production has started at its plant in Texas and at its plant in Germany. But its factory in Shanghai was shut down on March 28, and remains shut down today amid the Covid lockdown in Shanghai.

It’s amusing to note that Musk has been eerily submissive to authorities in China that imposed the lockdown in Shanghai, and he has been mouse-quiet about it, in contrast to his big-mouth defiance in the US when authorities attempted to do the same during the lockdown in California. He sure knows how China’s authorities deal with billionaires that attempt to usurp its power structure – and not a thing from him about “free speech” in China, LOL.

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  134 comments for “New Vehicle Sales Plunge as Chip Shortages, Production Cuts, Low Inventories Drag On. Back Where They’d Been in 1979

  1. J-Pow!!! says:

    Time to buy my new Plaid!!!!! Hahahahahahaha!!!!!

    • Raj says:

      The net result is that many Americans are unable to buy cars today, that they could afford 5 years back. Seems like we are getting poorer, even though we have more Dollars!

      Food for thought?

      • Gen Z says:

        The Japanese websites have jacked up their prices for 20-30 year old vehicles, including death traps like the Toyota Hiace, Nissan Urvan and that Isuzu van.

        • Raj says:

          Wolf, I learned from a George Gammon video that BLS was increasing weightage of cars in inflation and decreasing weightage of rents.

          Now BLS wants to minimise measured inflation, just like mob would minimize measured crime rate if they had to calculate it.

          So BLS is hoping that car prices would inflate slower than Rent. What are your thoghts on this, given that you have effective trackers for both.

        • Wolf Richter says:

          Raj,

          Good lordy. Dragging Gammon’s nonsense into here. He got his nonsense from reading ZH headlines. I’ve shot this nonsense down before. So here we go again:

          1. EVERY 2 years in January, routinely, the BLS adjusts the weights to changing consumption patterns — and consumption patterns do change, as some things go out of use, and others are introduced, and people buy more of this and less of that.

          2. The changes are small.

          3. Here are the actual weights of the two rent factors combined “rent of shelter” and the new and used vehicle weights (apologies for the formatting as comments don’t allow regular column formatting).

          The weights in % of the total basket (=100%):

          ——————– Oct 2021 — Dec 2021 — Mar 2022
          Rent of shelter —- 32.083% — 32.563% — 32.423%
          New vehicles ——– 3.856% — 4.105% —– 4.094%
          Used cars trucks —- 3.35% —- 4.143% —– 4.17%

          4. Note that the weight of rent of shelter INCREASED between Oct and Mar

          5. Note that both new and used vehicle weights also INCREASED between Oct and Mar

          6. weights increased because people are paying a greater percentage of their total spending because rents and vehicles have gotten more expensive relative to other items in the basket.

        • Al Loco says:

          What do you mean jacked up? The demand along prices for these vehicles have skyrocketed since the 2020 money printing. The same thing has happened in the JDM motorcycle market also. Vintage, same thing. Anything that was even moderately affordable was scooped up. Stuff no one wanted a few years ago is going for crazy money. If it’s a death trap, that means it’s probably harder to find and therefore more $$$.

        • Gen Z says:

          So these serfs with free money would rather buy a van that uses their legs as the crumple zone? And pay premium for it, pricing out the locals in third world countries from buying them?

          There is a reason why second hand 1990s Japanese are cheap—Death traps.

        • c1ue says:

          I am confused by your statement.
          “Japanese web sites” – Japanese companies are selling 20-30 year old cars? Japanese companies?
          In Japan, they have extremely picky inspections that cost $700 every year or two.
          That’s why the average age of a car on the road in Japan is under 9 years vs. the US, over 12.
          These older vehicles are scrapped or exported.
          If, on the other hand, we’re talking about web sites in the US or EU selling 20-30 year old Japanese cars – the price increases are likely due to the jump in used car prices all across the board…

        • Raj says:

          Thanks, that does explain a lot. Meanwhile, please note, most people cannot choose to not spend on rent, and rents have been going up by 10% to 15%.

          So I cannot digest why rent weightage would go down between Dec to Mar. It may be that some other essentials rose faster than rents during this period! Was it food?

        • cas127 says:

          Well, one way to avoid “weighting” controversies is to simply disaggregate “basket” measures and report the cost of individual goods, consistently across time.

          In this day and age, that shouldn’t be an issue, unless somebody is trying hard to obscure things.

          Of course, that still leaves the hedonic adjustment jiggery-pokery…

      • Augustus Frost says:

        Yes, Americans are getting poorer and it’s going to continue, for a long time.

      • joe2 says:

        There’s more than one way to create a shortage of skinned cats. Which, along with raising the prices of everything, seems to be the point. Stealth rationing.

  2. InLimbo says:

    Was in my local Honda dealership in midwest. Took a picture of the empty NEW car showroom. Empty.
    Asked about that and they told me chip shortages.
    This isn’t the America I knew.

    • Adrian says:

      OMG i thought it was just my location. I went to get my normal oil change. As i was sitting in the waiting/show room; i felt something different but it took me a while to figure it out. There were Zero cars on display in the waiting area which is always the exact same location as the show room. Even when i looked out the window i realized all the cars on the lot were Used.

      • Raj says:

        If car production remains slow, Retail Vehicle Investment Trust (RVIT) may soon be created. They will raise cheap money like REITs and buy vehicles in bulk from dealers and sit on them for years creating fake demand, and sell small portions at ever increasing prices.

        Just like houses, price of vehicles will increase 25% a year and vehicles will be new real estate!

        Welcome to the future!

        • Anthony A. says:

          Yes, with an advertised feature like “you can live in your car if you can’t afford a house”!

        • cas127 says:

          Artificially restricted supply is a valid issue to raise and always a danger in a mkt with few suppliers (oligopoly) who can find it easier to cooperate in restricting output (otherwise they would undercut one another by producing more as prices rise).

          The auto mkt doesn’t have many manufacturers, especially domestically (and international suppliers tend to be vulnerable to fiat/foreign exchange rate manipulations and local content production rules).

          The fact that auto prices really haven’t *fallen* over decades of technological improvements (including computer design, CNC production, robotic automation, and internet based coordination) does suggest that some degree of conscious output restriction has been going on among the manufacturers.

          That said, the current pricing madness probably does have more to do with chip availability…but what genius level engineering to have designed products that cannot function anymore without single components (and to have not stockpiled that component).

          It really wasn’t *that* long ago that cars had zero chips…indicating that autos don’t *have to* have chips. Some functionality would be lost…but 100% functionality is lost when an auto isn’t made in the first place.

        • Jimmy Howell says:

          You can get all the chips you want but people are realizing they can not pay ungodly amount of money for a aluminum can full of plastic and bs.

      • Tee says:

        Shortage? Im in South GA, and every car lot I pass is now full of inventory. Six months ago, shortage, today not so much.

    • Boneidle says:

      Same here down under.
      Local dealer has no to minimum stock on the forecourt.
      Offered to buy my low Mile 2010 Honda Accord for more than I bought it for in 2015

    • Hal says:

      Last year, went to Lexus of Memphis (service existing vehicle). Spent over an hour shooting the bull with a salesman on the lot. We talked about everything under the sun (including the most reckless fed ever). Why not? He had NOTHING to try and sell me. Nothing. Same thing a shy girl gets. Nothing. Not a damn thing.

    • Former communist escapee says:

      Get used to it. No manufacturing base you get poor. Simple as that. Keep buying cheap crap sold at your local Walmart. Way to go Walton. You WON!!!!!!!!

      • Augustus Frost says:

        True, yet I keep on hearing otherwise. Somehow supposedly, the US is exempt from the reality that applies to everyone else.

      • Dan Romig says:

        I take satisfaction when I ride my locally designed and made carbon-fibre gravel racing bike. Wolf Tooth Components and OTSO bikes was started by mech. E guys who raced mountain bikes. Now they makes ’em.

        To me, that’s how things should work, eh?

    • Gabby Cat says:

      When your automobile has any parts made outside of the community – logistics can become an issue. We sowed globalization for cheaper made items we reap supply chain nightmares. Our forefathers warned us that if we ship jobs overseas, and import every day items, we are at the mercy of the other country. Now it is up to us to bring the manufacturing back to our communities. It will take several years and lots of money. Out items will become more expensive because wage and benefits are important here. We will complain about the cost for years till our grandchildren forget the COVID lessons. They will ship the local jobs overseas to make the product cheaper. Rinse and repeat. Seems to me if we had monopoly laws enforced and a few good politicians, the wealthy automakers that started this mess would be held accountable for the mess. Sue their legacy to bring money back into the workshops to build the brand locally again. Oh! Wait! Current politicians have no clue what Anti-Trust even means. Our educations system is sorely lacking… I digress!

    • Mickey says:

      I find it ironic that while the DXY increases, while that same dollar is buying less.

  3. SpencerG says:

    I know TWO people who have bought new cars in the past month.

    One friend of mine wanted to exchange her 2017 Toyota Highlander for a 2022 Highlander because it was about to run out of its warranty. She got the new one for $48,000 with a $21,000 trade-in, extended warranty, and a 3% five year loan. Not bad… 27 grand for a new car basically. She knew the 2017 Highlander would go for another five years but she was scared of losing the warranty because her radio console had gone out in 2021 and it cost (Toyota) $3,000 to replace it. Spooked her.

    My cousin went out and bought himself a Cadillac Escalade for $120K because… he wanted one. Sigh… SMH.

    • DougP says:

      She got a new car for exactly 48,000 and not a penny less. Dealers love that kind of attitude in buyers.

      • SpencerG says:

        LOL… I am sure that Wolf can tell us all about it from his experiences.

        But seriously… I think she did alright. She got what SHE wanted for MSRP and not a dime more. She had to look in five states to find one that wasn’t $5K-$10k ABOVE the MSRP… and when she found what she wanted it was only an hour from her house. She could have gotten a bit more for her trade-in but it needed new tires and some other things which apparently aren’t cheap on a Highlander. Plus her getting the loan before interest rates go to the moon is a good deal as well.

        Meanwhile my cousin’s wife thinks he got himself a “deal” because he didn’t pay $30,000 over MSRP… just $15,000. Hmmm… that is one way to look at it I guess.

    • COWG says:

      I’m looking at a Tacoma and will order to get the configuration I want….

      Base model with the only upgrade to a v6 vice a 4 cyl… base model is pretty well equipped stock… 29k…

      Toyota dealer emphasized msrp (no overcharge) with a 45 day delivery timeframe…

      • Peanut Gallery says:

        I also was quoted MSRP for a Toyota vehicle I was looking at recently.

        Is that just the standard these days? Charge MSRP?

        • COWG says:

          Didn’t we have somebody a while back who had a friend or somebody they knew tell us that Toyota gave marching orders to dealers : no overcharge of msrp….

          Seems I recall that…

        • Nemo 300 BLK says:

          I followed a BIG Toyota broker who sells inventory from a handful of dealers and moves dozens of units per month for them and currently, his Toyota deals range from $500 UNDER MSRP to $2000 OVER MSRP depending on the scarcity of the model. PRO models can be $5000 OVER.

          Sienna minivans for example are very scarce and currently sell within minutes for $2000 over.

    • Gen Z says:

      Toyotas are quite reliable vehicles, and they don’t get dated that easily. Why trade in a five-year old Toyota for a newer one?

      Countries in the third world use Toyotas that are over 30 years old and running fine.

      • VintageVNvet says:

        True that GZ,,, BUT, from what I have seen while visiting various so called third world nations in past years, the first thing they do is take off ALL the extraneous crap that USA GUV MINT now mandates, if it is there in the first place, which I have read it is usually NOT even now.
        Also, considering Cuba, the folks there are very very clever about figuring out how to either rig so vehicle works without, or MAKE the parts needed to keep cars running for eva!!!
        Contrast that with the program to get rid of all the low and lower dollar vehicles in entire USA a few years back that basically took away the ability of the poorer folks to drive much much cheaper per mile over all…
        And some fools think one of the political parties are working for WE the PEONs instead of the rich folks, EH?
        Remembering well the old and older cars I had while a ”struggling student” etc., etc., and it makes me feel sad, far damn shore…
        OF COURSE they were death traps in some ways,,, but I knew that and drove accordingly. Think Corvair, VWs, both bugs and vans, etc., etc.

        • Augustus Frost says:

          We live in the “landfill” economy.

        • Gen Z says:

          Japanese cars from the late 1990s and early 2000s are just as safe as American vehicles. It’s the cabover designs which are the death traps due to the lack of a crumple zone.

        • Anthony A. says:

          During the 1990’s, I worked in Trinidad & Tobago (Point Lisas area) for a year setting up a new methanol plant. My assigned driver had an older Toyota van with 600,000+ miles on it.

          He kept it immaculate and parts were available trough a mail order house. Many cars in T & T are very old and they are just kept up and seem to run as long as parts are available (somehow).

        • IanCad says:

          The “Cash For Clunkers” scheme really beggared the poor.

        • Apple says:

          Seat belts, who needs those anyhow?

      • COWG says:

        Gen Z,

        Caveat… depends on circumstances…

        Many ladies have a rational fear of a breakdown… their car represents a large degree of safety for them…a newer automobile gives them that…

        It also gives a measurable cost of ownership with the warranty protecting against an unexpected large cash outlay…

        You see a lot of the husband drive the used, the wife drives newer…

        • Anthony A. says:

          Good point, I never thought of that safety and security perspective.

        • SpencerG says:

          Exactly. My friend is in her 50s and knew that the 2017 Highlander would last quite a lot longer. But she had put a lot of miles on it in a short time (25,000 miles a year) and that was threatening her warranty coverage. In the NEXT few years she expects to not be travelling so much and thus the extended warranty will last a lot longer.

          Like I said, the $3000 bill for “just” the car radio spooked her about driving a car out of warranty. Plus she lives on the edge of a pretty dangerous city. And her husband had an older Toyota with much better gas mileage for commuting so he didn’t want it.

          In the end it was a good decision for HER. She got top value for her trade-in without having to put a couple grand into it. She gets a “do-over” with a car model that she likes. She gets Toyota to assume the financial risks of a breakdown for the next ten years. It is a different decision than I would have made but she is happy with it.

        • El Katz says:

          Spencer:

          It’s not “just a car radio”. Most features of a car are now controlled by a multiplex wiring system that controls a whole conglomeration of features…. and the radio is only a small part of that. There are miles of wires in a modern car (since the dawn of the screens on the dash that control everything from the radio, navigation, maintenance, to HVAC) and the plastic connectors that connect the whole mess have a nasty habit of pins failing or cracking and unplugging themselves. BMW learned this lesson in 2007ish when they introduced fiber optic communications inside their flagship vehicle without building in redundancy… and bricked many 7 Series in the process after the single fiber optic cable broke. At that time, one year old 7’s were on a half off fire sale until they could re-engineer the cables and the retrofit nearly cost as much as the value of the car.

          The $3,000 was likely more due to the amount of labor to dismantle half the interior of the vehicle to make the repair or the repair required unloading the parts canon until they got it to work. I, personally, have never purchased an extended warranty on any vehicle up until I bought our current techno-mobile. Why? Because of the complexity of the wiring of the “infotainment” systems and other government mandated gobbledygook that serves no purpose if you have any skill as a driver.

          Oh…. and ordering a vehicle that is not a popular spec (aka the pickup with no options) will be built somewhere between when hell freezes over and the second coming of Christ for a variety of reasons. The key one is that volume manufacturers do not run lots of one builds… One of the tricks we used to use when we had a car we liked and it was timed or miled out (company car) was to order a unicorn. It would never be built and we could keep our favorite car for months and months past it’s due date because our order was never fulfilled. So, don’t be surprised if the order is “recycled” beyond the forecast delivery date provided by the dealer.

          Toyota isn’t in the bespoke business like Porsche or Bentley.

          Selling for over MSRP: MSRP means “Manufacturer Suggested Retail Price” – key word being “suggested”. If you read the mouseprint on the Monroney you’ll see stuff like “dealer is free to sell at whatever price they choose”. ADM stickers are “frowned upon” but are tolerated because of the pesky Federal laws regarding price fixing and the cost of defending anti-trust behavior. With that said, it doesn’t preclude a manufacturer from withholding additional product outside of the dealer’s normal allocation – which has the potential of reducing the dealer’s volume over the long haul. That is perfectly legal if done properly.

    • Augustus Frost says:

      A 2017 model should last a lot longer than five more years. I bought a 1994 model in 1996 and got rid of it in 2016. My goal is to buy either one or at most two more cars.

  4. Confused says:

    While waiting for my old Honda Accord to be serviced at the local dealer last week, I looked at the sticker price of a new Honda Accord Sport. The MSRP was approximately $29,000, and the Dealer’s sticker price was approximately $45,000. Of the latter amount, $5,000 was pure price gouge. The rest was for several grossly overpriced options, such as paint protection, “Crime Patrol,” etc.

    • Wolf Richter says:

      Confused,

      When people see these stickers, they should channel Nancy Reagan: “Just say no.” And walk out forevermore.

      And if everyone did that, those stickers would come off in a hurry.

      • Kunal says:

        This is simply due to more demand less supply. Because supply is not growing, prices will keep going up till demand comes down enough to match the supply.

        • Wolf Richter says:

          Demand at these prices may already be low. These are are horrible sales numbers. The industry would normally be in full-blown collapse mode with these sales numbers. It’s just that supply is even lower, and so low that we cannot see how low demand is at these prices.

          There are signs that inventories are building in tiny increments. If this continues, we should get some clues as to how much demand there is at these prices. The first such clue will be the disappearance of the addendum stickers.

        • Tom S. says:

          I think the big 3 have shifted to only finishing the premium vehicles with all the options. They know demand on the low end has cratered or moved to Kia/Toyota and are reacting accordingly.

          It seems to me that only the wealthy or foolish are waiting in line (for who know how long) for their new fully loaded pickup. The needy are buying used or not buying.

      • VintageVNvet says:

        WE just did exactly that, and also for honda accord but hybrid,,, dealer added bunch of ”stuff” and $2K ”dealer fees” and we walked away even though with excellent trade in it was going to cost us less than $2K cash,,, and the 50 MPG was certainly attractive.

  5. DB Cooper says:

    “He sure knows how China’s authorities deal with billionaires that attempt to usurp its power structure – and not a thing from him about “free speech” in China”

    “Take another look and tell me:
    Who’s zooming who? Who’s fooling who?”

  6. Publius says:

    Maybe institutional investors are buying cars and parking them, to repaint and flip or lease to the masses that can’t afford one?

    • Auld Kodjer says:

      Very clever, my Roman commoner.

      Humour based on convergent themes with a touch of cynicism is always a winner.

  7. phleep says:

    Time for (1) a buyers’ strike, and (2) mergers, consolidations, and downsizing in the industry.

    It doesn’t make me happy to say it, it just makes business sense.

    I’m very concerned about a world that is suddenly fair toward zombie employers. But I won’t just keep eating these price rises.

    My last car was a 1993, still running fine at last count. Latest is a 2000. Runs great, and it is not a phone masquerading as a car, with dumb distractions and massive conflicts of interest.

    • Mr. House says:

      “I’m very concerned about a world that is suddenly fair toward zombie employers.”

      Like this just started? Many people have been saying since 2008 this is where we’d end up. When the connected “rich” can’t fail but everyone else can, you’re going to have trouble at some point.

    • IanCad says:

      “….a phone masquerading as a car…..”
      I shall shamelessly purloin that!

  8. fred flintstone says:

    I hope they choke on those semiconductors made outside the US.
    Of course the jerks who out sourced the production are all retired on a gazillion dollars of options, pensions and cash they stole from the shareholders for these crappy decisions.
    Speaking as a retiree I would be willing to pay 15 percent more for most things to get our country’s production back…..of course most folks might not agree.

    • Miatadon says:

      Do you drive US brand cars? I don’t because Japanese cars are so much better quality. I used to love American cars, especially 1960’s GM products, and I owned many Cutlasses, Skylarks, etc. The newest American car I’ve owned was a ’71 Chevy Monte Carlo. Having driven newer US-brand rental cars and company cars and experienced breakdowns and just how poorly they drive, I am remain surprised that US car companies are still in business.

      • cd says:

        Toyotas are made in US, Hondas too, BMW’s etc

        • El Katz says:

          The bulk of Honda and Toyota production sold in the United States (and Canada) are built in North America. Believe it or not, the domestic (North American) parts content is higher in those brands than most brands that people think are “American”.

      • Brant Lee says:

        There were a lot of GM vehicles with windshield wiper electronic problems in the 90s, erratic stop and go. I had enough of it and pulled into my Chevy dealer, couldn’t go anywhere else. Some pretty boy comes out to assess the initial problem and said there were a lot of vehicles recalled with the same thing. Goes in, comes back out, and said nope, yours is not on the list.

        What to do? I needed it fixed so the part (module) was $110 plus $85 half-hour labor (this was the 90s). Here comes a grinning mechanic out with a screwdriver, takes out four bolts, and replaces the part in less than a minute.

        If I owned the dealership, I would have at least told the shop to not let the customer see how they got screwed on labor. This place was run like a racket on its own customers.

        Right then I felt totally bent (over) for owning a GM product and I’ve never bought another one. Good thing it wasn’t a transmission. Those things stay with a person for a while.

        • El Katz says:

          The labor charge was covered by the time allowed in the “flat rate manual”. Keep in mind that the flat rate bites both ways. If it takes the technician 2 hours for a half hour job, the customer pays the half hour – not the 2 hours it actually took.

        • Frankenstien says:

          I had the exact same thing happen, except I installed the part myself. My wipers quit and I discovered there was a recall on vehicles just like mine, but not including mine. I walked into the parts department of my local dealer and said I had a 94 GMC pickup and the wipers quit. The parts counter guy didn’t even move his feet – he just reached down, grabbed a box and slapped it on the counter. “You need this.”

      • Swamp Creature says:

        I haven’t touched an American made car in 40 years. The last one I bought, a 1978 Mustang was such a piece of crap I vowed I’d never touch an American car again. And I didn’t. I had to trade the Mustang in to a shiester dealer here just to get rid of it.

        • Cd says:

          never had a problem with GMC Sierra’s….
          all cars break down just some more than others

      • Hal says:

        I switched to Toyota/Lexus a long time ago because I got tired of walking.

      • Marc D. says:

        American cars’ reliability has gotten much better since the 1980s. There’s really not a big difference between them and the Japanese anymore, in that regard.

    • Gen Z says:

      You got the van life community overbidding on Japanese death trap vans like the Toyota HiAce, where the crumple zone is your legs and accidents are fatal.

      Countries like the UAE are planning to ban these Japanese death traps by 2025, but those countries have the newer models with “improved” safety features.

      • El Katz says:

        Those vehicles were never destined for the U.S. market as they wouldn’t pass Federal safety or EPA standards. It’s the aftermarket seller that is importing them – but they have to be 25 years old or older to qualify for importation.

        It’s the same crowd that’s been importing JDM Sylvias and Skylines (also known as the GT-R).

    • intosh says:

      How about attacking the issue at the source by consuming less? That’ll put pressure on prices. But of course, few are willing to resist their desires for that next brand new shining thing.

      It’s easy to put blame with hindsight but virtually everyone was okay (were there nation-wide protests, besides by those directly affected by factory closures?) with outsourcing production because 1) you get things back cheaper, 2) production jobs are “low skilled”. Are the people who are willing to pay 15% more (which is very conservative, try 40%+) the same people willing to work production jobs?

  9. Old school says:

    I think I have about 100,000 miles left in my vehicle, plus I will inherit at least one vehicle that has about 125,000 left in it. I should be good for next 25 years thank goodness.

    • Anthony A. says:

      Many of my friends and neighbors are in the same position as you. I have 64,500 miles on my 2005 Mustang convertible and it’s got new tires, brakes, A/C compressor, etc. It’s got a long way to go. Our other small SUV has 13,000 miles on it and that should last longer than me. No other new or used cars in our future unless one takes a hit and is totaled.

      Some of my neighbors have cut back and reduced down to one car. Smart stuff if you can do it. Mostly retired folks around here and many don’r even drive anymore, including my handicapped wife.

      This country’s manufacturers needs to build (rebuild) a base of critical products in the U.S. to minimize these kinds of supply problems, but that would take years to pull off.

      • Cem says:

        The US is the largest producer of good anywhere in the world outside of China.

        Stuff is being produced here but a little artificial scarcity goes a long way towards that GP line.

      • Anthony says:

        Just reached the age where I can now get free bus, train and tram travel in my local area and bus travel nationwide. With the price of diesel hitting, in US terms, $8 a gallon it’s a very attractive option especially as there is so much good quality public transport. English cities tend to be much more compact than American and the local bus stop is only three minutes walk away. On top of that, of course, driving into town centres tends to a bit nightmarish and very expensive so everyone gets the bus.

        The other thing is, that with a local bus app on my iphone you know when the bus is coming so normally very little waiting time at the bus stop. The result is I now do only about 1500 miles a year in my 2009 Octavia (61,000 miles and 50 miles to the gallon, us numbers) unless I drive to France(1000 miles each way) on hols, of course…….which with roaring inflation, is looking less and less likely….

        • Augustus Frost says:

          I wouldn’t ride public transportation where I live even for free. First reason is the time and distance. I won’t give the second reason.

      • Seneca’s Cliff says:

        I recently moved my small machine shop to a new location near two big Intel plants and an Analog Devices car chip factory. I had to get basic umbrella liability insurance and 9 out of 10 insurance companies turned me down even though I have had a spotless claims record for 30 years. The reason was that I put on the application form that I would be making parts for the semiconductor industry , which for some reason they thought was too risky. I told one of them , enjoy buying a $70,000 Toyota because it is partially your fault. We will not be fixing the supply chain with this kind of stupidity going on.

        • 91B20 1stCav (AUS) says:

          Seneca-financial/insurance/regulatory ‘tools’ becoming more important than the manufacturing national-revenue production mission they were intended to amplify…

          may we all find a better day.

    • Jon W says:

      Problem is, right now you are enjoying having an older car + savings vs the smuck who has new car + no savings. That’s great unless the fed really lets inflation rip, and you also end up with no savings.

      Then the new car guy is laughing in your face.

      Would the fed do this? Well for the last 20 years the fed has let ‘massive mortgage on hardly any income’ guy laugh in my face almost every year I’ve been toiling away, so yes, I think they would happily do this if it served their interests.

      • perpetual perp says:

        JW. The ‘new car guy’ will not be laughing in anyone’s face because nobody will be showing up. No buyers, no business. No laughing.

  10. Mr. House says:

    But but but the war was only about social justice!!!! Heretic ;)

  11. Cobalt Programmer says:

    I told ya’ll…
    I’ll bi bak…(read it in a German aksantt)

    1. Soldiers were promised in lands. That is why Virginia military district exist in Ohio. When no more land can be given, soldiers were promised pensions. Actually their wives and children too. .gov paid civil war pensions until 1970s. Long story (that old vetran married a single mother in 1897).
    2. “South got nothing”? They got lot of beautiful women.
    3. “Midwestern farmers disliked the sugar tariff” Come on…Idaho sugar beet farmers? Idaho batolith formation belongs to inter-mountain west. Psst…Its the sugar industry. Sugar was a luxury until 1900s. Only rich got sugar in life. Proof is in the pudding…
    4.4.22. How are you my friend. I know, therapy is difficult. Just hang in there. We will meet sometime outside the library.

    • Mr. House says:

      ” Soldiers were promised in lands.”

      In the south? As part of enlistment or something? I’ve never heard that, but i have heard of carpetbaggers.

  12. JeffD says:

    Over a trillion semiconductors are produced a year, and yet somehow enough can’t be produced to build 500K vehicles a quarter? Something is rotten in the state of Denmark.

    • JD says:

      My only guess is that perhaps there are many semiconductors in a vehicle not just a 1 to 1 relationship? Also, I imagine the semiconductors in a vehicle have much greater complexity than most other semiconductors. But these are just my best educated guesses on a topic that I’m not super knowledgeable about.

      • ctcarver says:

        There are many chips in cars. There is also a complicating factor in the US at least that the chips have to meet quite strict quality and reliability standards imposed by the Dept. of Transportation. Far more so than run of the mill computer processors.

        In general the chips used in vehicles tend to be far lower in computing power than high end chips for performance computing, but they need to be sure to have exceptionally long lifetimes.

        If the control unit running your anti-lock braking system (or numerous other systems) fails while you are driving the results can be fatal.

      • JeffD says:

        There are about 1000 semiconductors per combustion vehicle. So, an additional 500K vehicles/quarter = 2M vehicles a year = 2 billion semiconductors vs 1150 billion semiconductors produced last year (under extreme supply constraints). So, I believe something is rotten in the state of Denmark.

        • doug says:

          I read that the automotive chips are less profitable, lower end chips. Easy to push them back on the schedule if you make more making other chips, which is my understanding. IMO the chip guys don’t really need the automotive industry to survive….

        • Apple says:

          Automotive chips are very old. Most at least a decade old. No one is going to build a new factory to build 10 year old chips.

          It takes GM 5-7 years to produce a new vehicle. They will always be years behind.

  13. Khowdung Flunghi says:

    “March 2 (Reuters) – Carmakers including Germany’s Volkswagen (VOWG_p.DE), BMW and Porsche are struggling to obtain crucial wire harnesses as suppliers in western Ukraine have been shuttered by the Russian invasion, forcing them to curtail production.”

    • Dan Romig says:

      Up on the Iron Range in Bovey, Minnesota, George Klus has this to say, “Until I went to visit this company, I would have thought a wire harness was something you put on a horse. Wire harnesses are in every engine, every motor that we use today, and I got very excited about that.”

      Klus’ Highland Holdings LLC bought MnStar Group in September 2020. Employee count since then has gone from from 28 to 43. A 30,000 square-foot facility is being built next to the 24,000 sq ft facility in production now. Klus plans to have 65 to 70 employees by next summer.

      MnStar wires are in fire trucks, snow plows, farm equipment, utility trucks, and boats.

      Klus is looking for engineers, “I could hire three or four of them today if we could find them.”

      And from Tammy Wersal, VP of Operations, “These are all custom-made specific for our customers for their needs. There is no way to mass produce them. Our employees are very proud of every single harness they produce.”

      Sourced from the Minneapolis newspaper 30 March 2022.

  14. Brian pawlak says:

    Shoulder deep in auto industry waste. A product of our own demise.

  15. cd says:

    probably time to short auto group stocks, auto parts seem rich up here also

  16. Phoenix_Ikki says:

    It’s funny you mentioned this…I am still waiting for his diehard fanboys to call him out on his BS hypocrisy..oh wait, that will never happen, he is busy polling, crying and then buying a large chuck of Twitter because it hurts his feeling while his fanbase are tripping over themselves defending every single one of his action…if there’s a ranking for modern false idol, he definitely deserve to be at the top.

    “It’s amusing to note that Musk has been eerily submissive to authorities in China that imposed the lockdown in Shanghai, and he has been mouse-quiet about it, in contrast to his big-mouth defiance in the US when authorities attempted to do the same during the lockdown in California. He sure knows how China’s authorities deal with billionaires that attempt to usurp its power structure – and not a thing from him about “free speech” in China, LOL”

    • Brant Lee says:

      Not to mention Apple, Amazon, Walmart, anyone corporate.

      • Apple says:

        Foreign countries play be different rules.

        Head of Google in Russia had FSB agents show up at her apartment to demand Google remove an app.

        They gave her 30 days. Google secretly moved her to a hotel and the same agents showed up and said clock is ticking.

        Google took down the app.

    • Random guy 62 says:

      IMO he is just happy to accept the China shutdowns as an excuse to close the plant and divert parts elsewhere since they are in short supply.

  17. Depth Charge says:

    “For example, today GM halted production of its Chevrolet Silverado 1500 and GMC Sierra 1500 at the Fort Wayne Assembly plant in Indiana for two weeks due to the semiconductor shortage.

    When GM announced the plant shutdown last week, it said that chip supplies have improved so far this year. But there’s “still uncertainty and unpredictability in the semiconductor supply base, and we are actively working with our suppliers to mitigate potential issues moving forward.””

    Sounds like a whole lotta BS in this one. A two week shutdown is even longer than past shutdowns. I’m not buying the “chip supplies have improved” nonsense.

    “Experts” said this was all supposed to be over by the 3rd quarter of last year. 6 months later and now they’re saying it is going to last another year+. Sounds like everybody’s just been talking shit and nobody knows when, if ever, things will improve. Time to bring manufacturing back to the US, but so far CRICKETS.

    • Flea says:

      It’s a stall game so USA can bring chip manufacturing here ,within a yer or two there should be a flood of chips ,I long for days of no chips in cars

      • 91B20 1stCav (AUS) says:

        Flea-your resulting engine management would likely take a serious hit on its mpg/emissions performance unless it was a very small car (but i’ve always enjoyed the process of dialing-in a rack of Mikunis or Keihins on a UJM…).

        may we all find a better day.

    • Peanut Gallery says:

      It’s not that simple. Who is going to invest in a multi-decade capital investment to bring processes onshore at the risk of globalization recovering? I am not optimistic about global trade recovering, but it is possible and businesses are having a hard time investing in something as huge as bringing gigantic manufacturing processes back on shore if all of a sudden someone overseas can do it at a fraction of the cost.

      Frankly, businesses would prefer to offshore elsewhere in a more friendly sovereign state than produce in the US. Labor is just too expensive and uh, inefficient here in the US.

  18. Zark Muckerberg says:

    There isn’t a chip shortage. I see plenty whenever I walk in my gas station: doritos, cheetos, lays, pringles, soft chocolate chip 😉

    • SocalJimObjects says:

      Wait till later this year. I think there’s going to be a food shortage in the Good Old USA.

      • Lone Coyote says:

        There’s already less farmers planning on planting corn this year (corn is pretty fertilizer intensive, and fertilizer prices are up because of Russia/Ukraine and high nat gas prices). Combine that with rumors about the federal government wanting to put more ethanol in gas to stretch the supply and corn is going to be in short supply this year.

        • Dan Romig says:

          The USDA is now forecasting 89.5 million acres of corn in the USA for 2022. Soybeans are predicted to be a record at nearly 91 million acres.

          “Renewable Fuels Association President Geoff Cooper said it’s baffling that President Biden continues to overlook ethanol. Reuters reported the Biden administration is considering allowing E15 use this summer, but no definitive plans have been announced.”
          -Yesterday’s weekly email of farm news’ updates from Grand Forks, North Dakota.

          My US Senators in Minnesota are pushing for this too.

          But DanBob don’t use no corn based ethanol in any of his gasoline engines. DanBob likes his corn grilled in the husk; sometimes pre-soaked in water; sometimes not.

          DanBob is curious to know how Mercedes does with corn in its F1 engines this weekend in Australia.

      • Augustus Frost says:

        Even as food is exported elsewhere.

  19. Stic Zadinya says:

    The United Nations came out today with another dire warning about the global warming crisis and how we really need to curtail consumption worldwide. The Russian invasion aside, maybe all of the recent “inconveniences” everyone is contending with have their roots in a global effort to get us accustomed to a new way of life.

    Prior to covid making its appearance, global warming was the biggest concern on the world stage. Maybe the pandemic was introduced to shake up the reality that we can’t continue to have the voracious appetite of consumption the human population has had in the past.

  20. R2D2 says:

    It is time to bring back “rationing”.

    Like our grandparents in England and Europe after World War 2.

    The war on Covid has left the world exhausted.

    Give people an online “ration book”.

    Ration cars to 1 new purchase every 10 years. Ration gasoline to 1 full tank per month. Ration food to 3 portions of meat per week.

    Ration demand, until the worldwide supply of “stuff” recovers to normal.

  21. Gen Z says:

    C$35,000 for a 1980s Toyota Land Cruiser.

    I’ve tried cutting back on avocado toast, Starbucks and even tried to save on food costs completely by photosynthesizing like a flower, but it seems to me that both vehicle & home prices are increasing rapidly than before.

    • El Katz says:

      An 80’s Land Cruiser is an iconic vehicle with a strong following of people who are willing to pay for the durability and versatility of such a vehicle. Land Bruisers have been high dollar resales for a very long time – particularly the FJ’s that were knockoffs of the Land Rovers.

  22. Al Loco says:

    I recently heard a contractor say not to buy a “2021 model year house” due to quality issues related to supply chain problems. I’m curious if the same type of pressure could be put on chip manufacturers and final assembly? Substitutions to get it out the door. Not all transistors are created equal and they can fail in a slow hard to diagnose manner.

    • Publius says:

      Good to know. I mean, if the long completion delays and new houses being boring/ugly/overpriced wasn’t enough. 😎

    • Depth Charge says:

      I would not buy a house built after 1999 unless it was a custom and I knew the builder.

  23. Peanut Gallery says:

    A nice complementary chart to this would have been average/median price of vehicles.

    Was the drop in sales due to supply or demand? Only price determines the answer to that question.

    • Wolf Richter says:

      Peanut Gallery,

      Prices have spiked. So they may have reduced demand, but demand is still higher than supply, and we don’t know what the demand will be at these sky-high prices when enough supply emerges. This is going to be an interesting dynamic. Similar to housing (except there is no “shadow inventory” in new vehicles, but there is in housing).

      I have the JD Power data of average transaction prices going back a few years, but not for every month. But I do have them for every June and December. The ATP is seasonal, so you cannot compare February to March. You have to compare year-over-year. This is through December 2021. I will update it in June:

      And here is New Vehicle CPI +12.4%

  24. Peanut Gallery says:

    I work in finance/banking related to auto finance, and here in our area of the US (Pacific Northwest), we are seeing lenders across the board increase rates.

    The 3 year UST rates have exploded upwards lately and that is creating a lot of pressure for auto rates to advance up.

    I’m sure a lot of this (at least some?) of this decline is due to prices remaining high and rates going up quickly in the immediate term. Just like with housing, the rates move up way faster than the seller mindset – it takes time for sellers of assets to realize that their goods and services are deflating in value as rates rise

    • cd says:

      Auto rates have eliminated risk, they will pay dearly….

      I remember the 90’s we opend a secondary lending ABS paper program where we bought A-D paper. Sold it to Cap one….

      We maintained a 13% yield…non existent today….deficiencies were under 4%….

      that will never happen again, this with no score automation at all..

      a train wreck is coming for ABS

  25. Swamp Creature says:

    If China invades Tiawan or does something like what Russia is doing in Ukraine and we have to cut off diplomatic relations, and initiate trade sanctions, I wonder what affect that will have on the supply chain and the semiconductor shortage. We may have to start importing 3 wheeled cars from Thailand if that happens.

    • SocalJimObjects says:

      Worse come to worse, this country can get by without semiconductors because seriously, you can’t eat those. The US though imports a lot of critical drugs from China. Millions will die in a couple of weeks/months without those.

      Sanctions? We tried tariffs, and imports from China actually ROSE. With the “geniuses” we have in Washington, I am afraid to think of what will happen if we were to try sanctions.

      By the way Xi’s daughter is still studying at Harvard University, so hostilities will not commence until she’s gotten her Graduate degree.

      • Zark Muckerberg says:

        Critical drugs? Oh boy, I recently read they tried to convince other countries to accept their herbal pills that fight the current virus. They couldn’t explain how that magic work 🙄

      • Peanut Gallery says:

        “Xi’s daughter is still studying at Harvard”…

        Can we get her to go for another degree?

        lol

  26. fred flintstone says:

    This is better than SNL…….and free……no pay cable.
    Today…..fed governor brainard (left off the capitals on purpose) stated that inflation was much too high and that the fed would raise rates and begin to sell assets as SOON as May meeting. Soon…..what a sick joke.
    Where has this bone head been……..oh…….on the FOMC voting for easy money……and lobbying for easy money while we all screamed for tightening. Maybe she sees JP on the side.
    and they pay these idiots for their time on the fed……..educated morons.
    Our leadership is so bad and crooked that I’am not surprised a big crack does not develop on Mount Rushmore.

  27. Ralph Hiesey says:

    Wolf, I hope you finally you realize by now that price increases aren’t totally 100% the Fed responsibility. Seems to me shortages of stuff due to Covid (and other?) are obviously contributing .

    It’s not obvious to me what proportion is the Fed, and what proportion is Covid (or other?) shortages– I’m sure they both have influence–but I haven’t been able to figure out their proportion.

    It seems in the past you are so often seem certain it’s 99% the Fed. Can you explain? Am I’m exaggerating…?

    IMO, sad thing is I don’t think the Fed will be able to fix it. They’ve got two choices: more sneaky QE, or crash the financial market.

    • Wolf Richter says:

      Ralph Hiesey,

      I’m surprised that you still don’t get it. What the $5 trillion in money printing and the Fed’s interest rate repression have done is STIMULATE DEMAND for everything to ridiculous levels, and it changed the mindset, the whole psychology of how consumers and businesses buy, where price doesn’t matter anymore, and they’re paying whatever — the inflationary mindset. Inflation is at least in part a psychological phenomenon. I have explained this a million times over the past 15 months now. And I have no idea why you don’t get it.

      Consumers do NOT have to buy cars today. Cars are a discretionary purchase for most consumers because they can drive what they already have for another year or two or three. But no, they want to buy now, and they don’t mind paying ridiculous prices: this is the inflationary mindset, and the Fed has kicked it off. Many of these people made tons of money since March 2020 on RE, cryptos, stocks, etc. THANKS TO THE FED’S MONEY PRINTING AND INTEREST RATE REPRESSION, and they feel flush, and they’re spending like there’s no tomorrow. That’s how inflation gets going. It was so obvious that even I could see it 15 months ago, when I started pointing this out.

      People could go on a buyers’ strike, and demand would fizzle, and inflation would die down. But that’s not going to happen because the inflationary mindset has set it – it’s buy now or pay more later. Which pushes inflation to the next level.

      But the Fed has now set out to lower this demand by raising rates and unwinding its money-printing binge. And that will work after a while. And it will bring demand and inflation down after a while. There is no magic here.

      I have no idea why you don’t get this. I have no idea what you’re hung up on.

      • Ralph Hiesey says:

        Thanks Wolf for long comment. It’s not that I don’t “get” it– you’re making some good points that I quite agree with– it’s just that I’m also guessing that the Covid shortage has SOME part of the picture yet uncertain to me –,

        A lot of the facts in your piece today say shortage of chips and other components missing as causing significant supply shortage. At least for most stuff higher prices is basic economics 101.

        My other reason : the wide divergence of wealth. Some don’t give a damn what the price is if they decide they want it—- then there are the others those who can’t afford paying $10K more for a car now, will come back later when inventory rises and prices drop. So the rich guys are being now selected out now to shell out their big bucks. As you point out, sales volume is definitely down now, showing many are holding back.

        We will get the “final answer” when inventory finally gets to normal.

        HOWEVER, at the same time I am more concerned with the incredible stash of money that the Fed has been dumping for 12 years that so far has mainly been held as savings and not being spent —I fear that when this cash starts to awaken a very big future inflation problem much worse than now…but I don’t think has happened yet. Except some little bit showing up n housing. High inflation could pull it this money out fast.

        • Ralph Hiesey says:

          And– see LibDis below!

        • Wolf Richter says:

          “the Covid shortage has SOME part of the picture yet uncertain to me –,”

          Repeat after me:

          THERE WOULD BE NO SHORTAGES IF DEMAND HADN’T BEEN OVERSTIMULATED BY THE FED AND THE GOVERNMENT.

          I give up and let you stumble through no-man’s land on your own.

  28. LibDis says:

    Some consumers have to pay whatever they want, right now. I am stuck in this vortex myself, trying to finish a house I am remodeling to move into.

    When I need a 2×4 I HAVE to pay 12 bucks. I cannot simply walk away and find an alternative or wait for them to come back to 6. I don’t have a backup stash or ability to use the 2x4s I have now.

    I know several people who have been in the same situation with cars. The mentality of people in large cities with available alternative transportation often don’t understand this situation.

    But in a state like Florida, or Texas where you MUST have a car. When your car craps out you have to pay whatever the hell they want to replace it, new or used.

    I don’t know what the total effect of people who need something now no matter the price is, but it sure seems palatable to me. Maybe because on some level I am stuck in it.

    The same goes for all corporate purchases, for the most part, I would presume. When fleet vehicles are needed they are needed now, and they cant wait for 3 years from now.

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