Amidst Chip Shortage, Car Dealers Skip Labor Day Blowout Sales For a Second Year in a Row

Empire Lincoln in Huntington is bereft of the inventory needed for a Labor Day sale.

By Paul Riegler on 4 September 2021
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A classic Labor Day tradition is slowly disappearing.  Last year, car dealers and appliance stores eschewed the loud, boisterous commercials touting never-before-seen savings.  That’s because there would be no Labor Day sales events.

Car dealers last year didn’t need to clear out the previous year’s models because the industry was recovering from the early pandemic-related shutdowns in the spring, leaving little on the lot.  Meanwhile, major appliance buyers were waiting up to four months for new washing machines, dryers, dishwashers, and refrigerators due to a shortage of such appliances that was caused by pandemic-related restrictions that brought the number of workers in factories and warehouses down by 50%.  Another factor was pandemic-driven warehouse shutdowns as the virus spread.

This year, there’s no shortage of appliance sales but don’t expect to see fast-talkin’ plaid clad middle-aged car salesmen on late-night television inviting you to their blow-out sales.  There simply aren’t any being held.

This is because the auto industry in the United States is starting one of the biggest selling weekends of the year less well-positioned than it had been last year.  Its dealerships are bereft of inventory and customers are crisscrossing several states just to do what one was able to do locally, namely to purchase a brand-new automobile.

As a result, the average new car price has ballooned to $42,832 and used car prices are rising in lockstep. The average price of a used car has gone up 29% in recent months.

The 2021 vehicle shortages are thanks to a global semiconductor shortage – commonly referred to as a “chip” shortage – that has continued to constrain auto production in the United States since the spring.

Just in the past week, General Motors, Ford, and other automakers said they would halt production on some of their best-selling vehicles as a result of the shortage.

Today, semiconductors in cars are critical for vehicles, used in everything from monitoring the engine, which, in today’s vehicles, causes far less pollution than earlier models, determining how to best deploy air bags in the event of an accident, and managing touch-screen displays.

At the same time, they have provided drivers with a remarkable variety of convenient, useful, and amusing devices that make driving more fun, safer, and in some respects, less like driving than passengering.

The first microprocessors began to appear in automobiles with the introduction of the 1978 Cadillac Seville. That car featured a modified Motorola 6802 that powered  the car’s Trip Computer.”  The automaker introduced it with a video that featured a magnetic tape drive on a mainframe computer in action as well as a punch-card reader.  There were blinking lights and an early Seiko LCD digital watch made an appearance as well.

Billed by Cadillac as “Answers at Your Fingertips,” the “available Cadillac Trip Computer Goes With You Wherever You Go.”   This early computer, if you can even call it that, had 12 buttons, each used to “call up the desired display from the microcomputer.”

[Cadillac boasted that this on-board computer could answer the question, “How many miles is it to my destination,” although the driver would have had to manually input the number of miles he would drive before even stepping on the accelerator.  It could also calculate whether the car had sufficient fuel remaining for the trip and provide an estimated arrival time, based on current speed.  The automaker made the claim that the Trip Computer was a “sophisticated network that pays precise attention to what’s going on inside your Seville.”]

Meanwhile, today’s chips pay attention to what’s going on inside your vehicle as well as outside, using sophisticated cameras and millimeter-wave radar to recognize such things as whether there is a vehicle ahead of you or perhaps in your blind spot.

That feature that warns you if your vehicle is veering out of its lane? A chip does that.  The same goes for radar-based cruise control, the systems that warn you of a vehicle in your blind spot, and the systems that will park your car for you.  As a result of the chip shortage, Nissan is leaving out navigation systems, and Renault is eliminating a digital display that sits on the steering wheel column on its Arkana model.

To counter the shortage and possible future such shortages, Hyundai said it is developing silicon carbide technology-based power chip for an upcoming vehicle.

“We are aiming to apply our internally developed power chip to a new car to be launched in the second quarter of next year,” an unnamed Hyundai Motor official told the Seoul Economy Daily, without naming the vehicle.

Meanwhile, automakers have dozens of teams in place trying to address how they can emerge from the chip shortage relatively unscathed.

“The global semiconductor shortage continues to affect Ford’s North American plants – along with automakers and other industries around the world,” said Kelli Felker, a manager for global manufacturing. “Behind the scenes, we have teams working on how to maximize production, with a continued commitment to building every high-demand vehicle for our customers with the quality they expect.”

Ford confirmed multiple production cuts, including eliminating for two weeks in September one shift at its Kentucky Truck Plant in Louisville, where the Lincoln Navigator, the Ford Expedition, and the Super Duty pickup trucks are built.

Even the world’s largest automaker, Toyota, is not exempt from the shortage.

The Japanese carmaker said two weeks ago that it would cut production by 40% in September in order to deal with the chip shortage.

As for the dealerships, “It’s really simple,” said Michael Brown, owner of Empire Automotive Group, a mini-conglomerate in New York with ten locations and 16 brands that range from Audi to Buick to Ford to Lincoln to Toyota. “I simply don’t have the inventory to hold a sale.”

“When you have a Labor Day sale,” Brown said, “you want to create a buzz to draw traffic which then allows you to then sell cars in numbers.”

“I can’t do that if I’m running with about 30-40% of the inventory I normally have.”

(Photo: Accura Media Group)


Accura News

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