What Caused the Automotive Chip Shortage of 2021?

BMW M6

You may have already noticed that used car prices are incredibly high right now. That’s because many new car manufacturers had to halt production after a recent automotive chip shortage. The semiconductor suppliers had trouble making these chips and keeping up with the new demand for automobiles. This was in large part due to several factors that were out of their control.

Causes of the Chip Shortage of 2021

  1. COVID-19. Make no mistake, the pandemic was a big reason why the chip shortage occurred in the first place. When the global pandemic began, automakers and suppliers closed down. They canceled orders for parts, let employees work from home, and tried to weather the storm. When factories restarted, the demand was larger than anticipated and chip companies have struggled to keep up.
  2. Natural Disasters. At the same time, fires, floods and other natural disasters hit the chip manufacturing world. A fire at a plant owned by chipmakers Renesas Electronics in Japan decimated their production line. A drought in Taiwan also affected the chip suppliers and their ability to keep up with the high demand.
  3. High Demand. Americans stopped buying cars at the start of the pandemic. They simply “made do” with their existing car for as long as they could. As the economy started up again, many of these individuals and families hit the market, hoping for a new vehicle. Since production lines were down, all companies struggled to keep up with the surging demand.

Economists expect the chip shortage to affect car prices for a little longer. In fact, they believe the prices will continue to inflate for an additional year as manufacturers work hard to keep up. In the short term, automakers have cut the production of several of their less popular models and have redirected their chips into money-making vehicles.

Currently, the Senate voted in favor of legislation intended to battle back against overseas competition from China. They are investing more than $50 billion into the making of semiconductors that are vital to our supply stream.

Contact Our Torrance Mechanics Today

It is important to keep your current car running smoothly a little longer. While you wait for car prices to go down, make sure you’re taking good care of the vehicle you do have. Contact our mechanic shop in Torrance, California for a tune-up or a full vehicle check. Give us a call at (310) 857-2309 or use the contact form on our site.

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