2021 Chip Shortage: Supply Limited, Car Prices Increasing

February 10, 2021
Written by: Zach Shefska
Categories: Car Buying

Updated 5/26/21

This page is frequently updated as new information is reported.

The list of automakers cutting back production of new cars, trucks, and SUVs continues to grow. This page will be updated as new information becomes available regarding the semiconductor chip shortage of 2021.

What impact has the chip shortage had on new car supply?

Update 5/26/21

Nearly every automaker is cutting back production of their new vehicles as a result of the chip shortage. Days supply is an industry metric that is used to measure how much inventory a dealership has in stock relative to demand. Each manufacturer is experiencing a dwindling days supply of inventory. This means dealership’s are less likely to discount or negotiate.

ManufacturerDays Supply (April)Days Supply (May)
Ford4534
Lincoln5636
Acura5350
Honda5643
Genesis7457
Hyundai4941
Kia3430
Mazda4438
Subaru2416
Toyota2623
Volvo5545
Days supply of inventory

With a shortage of new vehicles, we have seen skyrocketing used car prices. Wholesale used car vehicle prices have increased for four months. The average weekly increase in price is 1% for the past 11 weeks. That’s an 11% appreciation in used car values in the past 11 weeks.

Buying a car in this market? Let us help you get a fair deal!

Update 3/3/21

One month after we first reported on AutoForecast Solutions projected decrease in new vehicle supply, not much has changed. Many auto manufacturers are still continuing to face supply shortfalls (not enough semiconductors) to produce all of their inventory. Ford recently increased their production cuts, directly impacting the Ford Edge and Lincoln Nautilus. The total expected shortfall in new vehicles for 2021 for all automakers is projected at 1.6 million units.

General Motors announced on 3/3/21 that “it was further extending production cuts at three North American plants and adding a fourth to the list of factories hit by the global semiconductor chip shortage.”

“The extended cuts do not change GM’s forecast last month that the shortage could shave up to $2 billion from this year’s earnings. GM CFO Paul Jacobson subsequently said chip supplies should return to normal rates by the second half of the year and he was confident the profit hit would not worsen.”

Update 2/15/21: Lost production as a result of the ongoing chip shortage has totaled 680,350 vehicles. AutoForecast Solutions has increased their forecast from 1 million to 1.3 million vehicles that will not be produced in 2021 as a result of semiconductor shortage.

So far lost production is approximately 564,000 units with the prospect of almost 1 million total vehicles not being produced this year because of the existing and ongoing semiconductor chip shortage. AutoForecast Solutions

What manufacturers are cutting back production?

Update 5/26/21

It is estimated that up to 5 million new vehicles will not be produced in 2021 as a result of the chip shortage. Current lost production by manufacturer is below.

ManufacturerLost production
Ford324,616
General Motors277,966
Stellantis252,193
Subaru45,272
Volkswagen45,215
Honda42,951
Nissan41,928
Toyota23,670
Tesla6,418
Mazda6,133
COMPAS4,200
Hyundai2,548
Volvo1,287
Lost vehicle production

Brands impacted so far:

  • Ford – Especially their new 2021 Ford F-150
  • Toyota – Especially their 2021 Tundra
  • Nissan
  • Honda
  • Mazda
  • Subaru
  • Stellantis which includes
    • Chrysler
    • Dodge
    • Fiat
  • VW Group which includes
    • VW
    • Audi
    • Porsche

Kia announced at NADA that they will not be limiting production as a result of the chip shortage.

What impact is the chip shortage having on vehicle prices?

From Black Book, “We are hearing more each week in the market about reduced inventory in the pipeline for Q1.With new car manufacturing facing supply chain struggles due to the microchip shortage, as well as a possible additional round of stimulus, the expectation is that pricing will remain strong throughout Q1 and into Q2.”

Other data from Black Book shows a recent increase in wholesale used car prices. As a result of limited new car supply we are seeing used car prices increase as well.

When will the chip shortage end?

Update 5/26/21

In a recent interview with Jean-Marc Chery, the CEO of STMicroelectronics for Automotive News, the executive was asked this very question. His response, “Our forecast is that we should start seeing an improvement to the overall situation in the first quarter of 2022.”

No one knows for certain, but many representatives from the largest semiconductor companies have provided guidance that production increases will not meet demand until Q3 of 2021 at the earliest.

From Reuters, “TSMC, the world’s top contract chipmaker, said it was “expediting” auto-related products through its wafer fabs and reallocating wafer capacity. It now expects to lift capital spending on the production and development of advanced chips to between $25-28 billion this year, as much as 60% higher than the amount it spent in 2020.”

Can I still get a good car deal?

Yes. The tactics used before the global chip shortage to negotiate a good car deal still apply today. Will you be able to purchase a vehicle at a similar discount compared to a month ago? No. Will you be able to negotiate a fair deal based on the current market conditions? Yes.

Is now a good time to sell my car?

Yes. Used car wholesale prices are just beginning to climb after 20 weeks of declines. If you have a vehicle that you are looking to sell we strongly recommend you get a quote from Carvana, Vroom, and CarMax. Take the highest quote you receive to your local dealership and ask them to beat it. If they don’t, sell it to the highest bidder.

We anticipate that wholesale used car prices will continue to rise for the coming weeks and months. With that in mind, you may want to get a quote today for your vehicle and then wait ~4 weeks to see if it has appreciated more.

My lease is coming due, should I buy it out?

Most likely yes. If your lease is coming due over the following 2-4 months it is likely that you will be in the rare position of having “positive equity” in your vehicle. Because used car prices are increasing, it may make sense to purchase your vehicle at the residual value set 3 years ago.

Latest news on the chip shortage

A chipmaker speaks: How it looks from his side – Automotive News

Microchip crisis takes big toll on Detroit 3 – Automotive News

GM extends shutdown at three plants due to chip shortage – CNN

No Quick Fix for Auto Chip Shortage – WSJ

Chip Shortage Is No Match for Sturdy Toyota – WSJ

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10 Comments

  1. Debbie Arvio

    Hey guys want to tank you for all you do!
    I do have a question and don’t know if this is the spot I post it to? I have never seen this addressed, but maybe I missed it.
    I am looking for a 2015 toyota venza limited AWD. I would love a 2016 venza redwood but it’s the last venza made by Toyota and it was only made in Canada. I’m from Illinois and when I do find a 2015 limited with low miles they always seem to be on the west coast and no one there wants to deal with it. How do I go about getting one of the 2 cars ?

    Thank you for your time,
    Debbie Arvio

    Reply
    • M. Ferro

      When you have to look far and wide for the exact model etc, your best bets are national chains, such as carvana and carmax. You will pay shipping, of course, but they make the entire process easier than doing it all on your own.

      Reply
  2. George Maderski

    My NY registration expires today, 3/21/21. I moved to Ct. Can I sell my car in Ct after this expiration date?

    Reply
  3. Diane S

    would it be better to wait till next year to buy a brand new car?

    Reply
  4. R Sriceso

    What if the new 2021 vehicle you want is not a popular model (and not an SUV/truck), rumored to be updated soon and the dealer stock is limited because of these two factors?

    I’m looking at a car recently on the lot (past couple of weeks) where some of the same model are on the lot for over 100 days. The Market Price Report doesn’t work for this make either, since it seems like the new cars for the brand are consistently listed at MSRP per the manufacturer’s guidance.

    How should I approach this type of deal?

    Reply
    • Zach Shefska

      As always we recommend requesting the out the door price and negotiating from there!

      Reply
  5. Rene L

    Would increased prices also affect a factory order that’s negotiated down to the invoice price? My lease ends in September and my plan was to factory order in July

    Reply
  6. Jeff

    In 2018 I bought a new Honda Civic EX for $20,250. Yesterday the dealership bought it back for $19,531. I’m loving this chip shortage!

    Reply
  7. John Regus

    What is the best way to negotiate the price of a new fully loaded with the prestige package ($8200) Genesis G80 2.5, wait until 2022? I had read that the best price to shoot for is to add 3% over dealer invoice because the dealer would make $1600 over what the dealer acquired the car for plus the manufacturer still will be paying the dealer 3% in holdback fees (I googled what the holdback is for Genesis and I saw 3%). What do you think of using a invoice price plus $1000. They say no but I bring up the 3% holdback fee. So what do you say about this tactic?

    Reply

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