May 15, 2021

When the chips are down, so are the cars

By John Van Nostrand, CNA managing editor

Maybe the smallest part of today’s cars is creating a big problem.

A lack of semiconductors, commonly known as computer chips, is significantly slowing down the production of new vehicles.

“In my 46 years, it’s the toughest I’ve seen to get vehicles, especially pickups,” said M&M Motors owner Jack Davis.

Not just used in vehicles, semiconductors are what makes a variety of appliances and technology work from refrigerators to televisions. The chips used in cars are connected to air bags, power windows and the light symbols on the dashboard.

A lack of the chips have made General Motors and Ford reduce production at factories in the states, Canada and Mexico,

Like with virtually everything else the past year, the COVID-19 pandemic, and the bitter cold weather in February in Texas that shut off the electricity, upset two chip factories in Austin, Texas.

There are chip semiconductor factories in other countries, but it just puts more demand on those sites knowing how common chips are in today’s devices. Supply can’t keep up with the demand.

“It has slowed or halted production on a lot of less-value vehicles,” said Todd Stalker of Stalker Chevrolet. “GM has put all of its resources in the Silverado (pickup) and larger SUVs. I’ve only got so many of these chips.”

Benson said Ford is promoting the return of its Bronco model and has saved chips just for that vehicle.

“And trucks are Ford’s bread-and-butter,” he said.

Davis said the limited number of chips equates to limitations on what features can be installed on vehicles.

“You’ve got to be careful what your order. You can’t get exactly what you want,” he said.

Stalker said he is still able to order new inventory, but not at the same volume as in the past.

“I might get 10 cars a month rather than 20,” he said.

Davis said some Ram pickups are only coming with one key fob, the chip-influenced device that starts the vehicle like a key, rather than the traditional two. Dealers are to tell customers when enough chips are available to make the second fob, the customer will be provided.

“That might take months,” Davis said.

Recent reports show the auto industry is expecting 1.5 million to 5 million fewer vehicles this year than originally budgeted because of the lack of chips. Business analysts say that could increase the cost of other new cars as a way for all the brands to curb the loss of revenue.

The shortage of new vehicles is putting higher prices on the used-car industry.

Even though car companies saw a drop in sales a year ago because of the pandemic, other industries saw a rise in sales because at-home devices increased in popularity. Available chips shifted from cars to laptop computer production.

“They are universal,” Stalker said. “We are competing with televisions, GPS systems. The same things in our modules might be used in a TV.

Semiconductors have been used in vehicle production for about 40 years replacing mechanical control devices. The more technological advanced vehicles became, more chips were needed to operate much of the car.

It is unknown when semiconductor production will return to a condition the car companies won’t have to fret. Things may start to feel better the end of the year according to some in the auto industry.

“They don’t know when things will get better,” Benson said.

“It looks like things will get worse before it get better,” Davis said.



JOHN VAN NOSTRAND

An Iowa native, John's newspaper career has mostly been in small-town weeklies from the Rocky Mountains to the Mississippi River. He first stint in Creston was from 2002 to 2005.