When Will the Car Shortage End?
The worldwide computer chip shortage affects almost every industry, from cars to dish washers, watches to TV’s and refrigerators. The issues causing the shortage aren’t going away any time soon. Current word is that it will be at least 2 to 3 years before things return to ‘normal’. Possibly longer.
The ‘new normal’ is that stores sell all of their stock orders months before they even arrive, so there are few new cars to test drive – or none.
So if you’re car shopping, what does this mean, and what’s the best strategy for you? Like everything else, it depends on your current position, what your goal is, and how long you can afford to wait. Here are the scenarios we get asked about the most, and our suggestions for how to address them:
I want to wait it out.
If you have a reliable car that’s not a lease, this can be a good strategy. The only downside is that no one knows how long the shortage will last. In addition to the pandemics and floods and other natural disasters that set the shortage off, demand for chips by new industries (such as the companies that make watches, smart TV’s, phones, refrigerators, thermostats, smart door bells, tooth brushes, speakers, medical devices, and a million other products) continue to increase demand, and will only get more competitive.
On top of that, even as chip makers are at maximum production capacity, it can take 3 to 5 years just to build a new chip-making facility. They are gigantic – the size of small cities – and require cleanliness that would shame a hospital operating room. They also take tremendous amounts of fresh water, which limits the number of locations where they can be built. Even as governments around the world contribute tax dollars to encourage new factories, they won’t appear for some time.
I have a lease that’s ending soon.
If you still need a car, there are 2 possible routes: If you like the car you have now, buy out the lease. Although interest rates have risen, you’ll still be paying less than you would for a new car, and you avoid uncertainty because you already know and like the car you have.
If, however, you know you want the latest model, place a special order for it at least 3 to 6 months ahead of time. To protect yourself, call your lease holder (Toyota is 800-874-8822) and let them know that you want to extend your lease because you’re waiting on a special order. If you don’t tell them ahead of time, you may have to pay a penalty of $300 or more.
I’m thinking about a special order.
If you want a new car, this is by far the best way to go, because it typically costs less than a car purchased from stock (assuming there are any), plus you get exactly the colors, packages, options, and accessories you want. Motorcars even has a Build Tool that allows you to play around with different combinations until you get exactly what you want (or we can do it for you, or with you, here in our store, over the phone, via chat video, etc.). Then just click ‘Submit’ and put down a $500 refundable deposit.
Once your order is submitted, your Product Specialist will let you know the expected build and delivery dates of your new car, and keep you in the loop every step of the way.
Most special orders take 3 to 6 months to build, so the sooner you submit your order, the better. The longer the chip shortage lasts, the longer build times become. For a list of how long it typically takes to build each model, click here.
Is it a good idea to sell my car now?
Whether you plan to trade in your car or sell it to a store or private party, it’s worth noting that you are negotiating from a position of strength. That’s because, as new cars become more scarce, used car values have skyrocketed as much as 30% over this same time last year. Your used car is worth more than at any time in history, especially if you’ve taken good care of it. Use sites like Kelley Blue Book to determine a base value.
I have more questions.
Excellent! We like questions. Feel free to chat with us at MotorcarsToyota.com, or call 216-321-9100. We’ll be glad to help.