Nissan said today it has been forced to slash production of its worldwide best-selling car. Honda and Volkswagen say they may be forced to take similar steps. The problem? A lack of semiconductors. The issue hasn’t affected car prices in the U.S. yet, but keep an eye on it – with cars dependent on an increasing number of processors to make their many automated features function, the worldwide supply of silicon processing chips has become a crucial factor in how much you’ll pay for your next car.
The chip shortage is another impact of the ongoing COVID-19 pandemic, with a particularly long tail. Factors include both the shutdowns and the recovery. Chip factories shut down in the spring, along with everything else. Consumers have bought up many chip manufacturers’ supply as the economy has started to recover. Millions of people working and studying from home have sought more powerful computers, as well as cameras and microphones for meetings…all of which eat into the available chip supply.
Nissan has now specified the shortage’s impact. The company is cutting production of its Note subcompact from 15,000 cars this month to just 5,000. The Note is not sold in the U.S., so this doesn’t impact prices in the American market yet.
But it will. Nissan may be forced to redirect chips from the production of other vehicles to boost the successful Note, shortening the supply of cars at dealerships worldwide. Americans buy few cars the Note’s size, though we buy a lot more subcompact SUVs. Find our list of the Best Subcompact SUVs here.
VW, Honda also affected
Both VW and Honda have now said they are examining which factories to shutter or slow until the chip supply recovers, though no decisions have yet been made.
Other manufacturers haven’t publicly revealed that the shortage is changing their plans, but we’re not aware of any that store a mountain of extra silicon in case of a chip shortage, so as the problem grows, so will its affects.
Automakers traditionally aim to have about 60 days’ worth of any one model on hand at all times. More than that, experience tells them, isn’t helpful. They’ll just be paying extra fees to store unsold cars. Fewer than that means consumers can struggle to find the combination of options and colors they want, and may move on to a rival’s car.
The latest industry average, according to research from KBB’s parent company Cox Automotive, is about 75 days. But some brands have slipped below the 60-day target (you may find it more difficult to find the specific Land Rover you want this month), while others remain oversupplied (make a Fiat dealer an offer right now…seriously, they were sitting on more than 320 days’ supply as of last month).
