A critical supply-chain shortage is keeping tens of thousands of new cars off dealership lots.
It’s not microchips. The microchip shortage that drove new car prices higher for most of two years has ebbed. It’s not even tire rubber or seat foam, though those both had their say on the new car market in recent years, too.
No, it has nothing to do with the cars themselves. Automakers have about 70,000 brand-new cars finished and ready to ship to dealers. They sit stranded at ports and factories, the Detroit Free Press reports, due to a shortage of rail cars to ship them in.
Ford, GM Feeling Early Effects
“A person familiar with General Motors’ Fort Wayne Assembly in Indiana,” told the Free Press, “there are thousands of finished Chevrolet Silverado and GMC Sierra pickups parked in the Fort Wayne area and no rail cars available to ship them to market.”
FordAuthority.com says cross-town rival Ford has a similar problem. “This is affecting Ford rival General Motors in a big way,” the site says.
One Company Moves Most Cars by Rail
Autoracks are specialized train cars designed to ship 12 to 18 vehicles. The train cars, Motor1 reports, “are part of a shared pool administered by a company called TTX” that serves every automaker. The company didn’t properly account for the surge in vehicle production brought on by the end of the COVID-19 pandemic. “Additional problems have come about due to changes in supply chain patterns, such as routing vehicles through west coast ports instead of the east coast, resulting in longer rail car journeys than anticipated,” Motor1 says.
It could take some time for the system to recover. Manufacturing new autoracks takes two to three years, Jalopnik reports.
The Alliance for Automotive Innovation – the largest trade group representing the automotive industry – says that more than 75% of the new cars sold in the U.S. ride trains toward their destinations. Car carriers – those semi trucks you see pulling racks of new cars – often handle the last step of the journey. There aren’t enough of them to substitute for the entire rail network.
Industry Asking Government to Intervene
Alliance President John Bozzella tells the Free Press the group is “asking the Surface Transportation Board to intervene and make sure the country has a fully functioning freight rail system.”
In the meantime, FordAuthority says, “automakers have reportedly reduced their production schedules by at least 50,000 vehicles” because of the bottleneck.
The situation hasn’t affected prices yet. America’s Big Three automakers already have a glut of new trucks to sell and have begun offering discounts to reduce it. The price of the average new car held steady in May, thanks largely to manufacturer incentives.
