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Auto prices sour amid chip shortage and diminishing sales

Date: July 04, 2022 Omkar Patwardhan Omkar Patwardhan
Auto prices sour amid chip shortage and diminishing sales 
New vehicle sales in the United States have reportedly dropped by more than 21% during the second quarter of 2022 compared to the previous year due to the ongoing semiconductor shortage causing continuous turbulence across the industry.



Reports suggest that despite the rapidly increasing inflation, high-interest rates, and gasoline costing over $5 a gallon, the demand beat supply between April and June, raising costs to a record high and pushing many consumers away from the new vehicle market.



Edmunds.com stated that automakers traded around 3.49 million automobiles during the April-June quarter, registering a dip of about 933,000 vehicles since the same quarter a year ago.



Further estimations by J.D. Power reveal that the average price of a new vehicle for the first half of the year reached almost $45,000, nearly 17.5% higher than the last year. Edmunds.com declared that as much as 12.7% of consumers with newly financed vehicles in June had monthly expenses of almost $1,000 or more.



General Motors, which noted a 15% drop in sales, reported that shortages of automobile parts and chips forced the firm to manufacture 95,000 incomplete vehicles that would be finished and sold by the end of the year.



Jack Hollis, executive VP of sales at Toyota Motor North America stated that considering the negligible improvement in chip shortages during the first half of the year, he does not expect the situation to get much better until next summer.



Hollis added that, due to peaking demand, microchip makers are producing at maximum capacity, showing no signs of catching up but falling behind.



Reportedly, Toyota sales dropped by almost 19% during the initial six months of the year, and 18% in June, allowing GM to take back the crown as the highest-selling automobile firm in the U.S., a title it lost a year ago.



Edmunds forecasted that nearly 3.5 million new automobiles were sold across the U.S. during last year, about 20.8% less than the exact period a year ago. He anticipates inventory deficits to persist for some time, further demoralizing the auto buyers.



Supposedly, Gasoline vehicles that are smaller and more fuel-efficient appear to be struggling as well.



Source credit: https://japantoday.com/category/business/chip-shortage-keeps-driving-up-auto-prices-cutting-sales

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Omkar Patwardhan

Omkar Patwardhan started his professional career in the hospitality industry. Having nurtured a deep-sated passion for words however, he found his way into content writing and now pens down articles for numerous websites, including News Origins, spanning the sectors of business, finance, and technology.