Looking to Purchase a New Vehicle? Here’s Why You Might Not Find Your Dream Car
In a country that loves its cars as much as the United States, you might not expect new vehicle sales to slow because of a shortage of inventory. But that’s what’s happening.
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Auto sales for August are expected to decline to their slowest pace this year, according to a new forecast from Cox Automotive. It expects the seasonally adjusted annual rate (SAAR) for the month to finish near 14.3 million, down from 14.8 million in July and 15.2 million in August 2020. The current projection is well below the average rate of 17.0 million a month through May of this year.
Total sales volume is expected to finish near 1.20 million for August, a drop of 9% from last August, which had one additional selling day. If that happens, August’s finish would mark the fourth straight monthly decline of 500,000 units or more since April’s post-pandemic peak pace of 18.3 million.
The problem isn’t a lack of demand for vehicles, but a lack of available vehicles to sell. As Time reported on Wednesday, a global shortage of semiconductor chips supplied mainly from coronavirus-ravaged Southeast Asia has forced carmakers to scale back production. Nearly 20 factories have stopped or reduced production in recent weeks due to supply-chain issues.
At Ford’s Kansas City assembly plant, which builds the F-150 pickup and Transit van, employees were temporarily laid off for a week as the carmaker waits for back-ordered chips to become available. General Motors said it will temporarily stop producing electric vehicles that require chips for certain features, impacting the production of the Chevrolet Bolt EV and EUV vehicles.
Meanwhile, Toyota said it will cut production 40% worldwide in September, reducing its output by about 140,000 vehicles. You can expect similar moves by Honda, Volkswagen and other automakers. The result is far fewer vehicles on dealer lots, leaving consumers with limited choices and higher prices.
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And the supply situation is expected to worsen in coming weeks.
“Available inventory on dealer lots has been falling for months, and sales have been constrained further and further as a result,” Cox Automotive Senior Economist Charlie Chesbrough said in a press release. “Soon the market will enter the Labor Day holiday weekend, usually one of the highest sales periods of the entire year, but with half the supply they had last year.”
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