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Until 2023? Auto prices will remain sky-high due to a shortage of parts

In the spring, there was a shortage in computer chips, which had caused auto prices to soar. Consumers seemed to be seeing some relief.

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Until 2023? Auto prices will remain sky-high due to a shortage of parts

This hope is now dimming. The supply problem is being exacerbated by an increase in COVID-19-related cases in Asian countries, which are the main producers and exporters of auto-grade chips. This is further stalling normal auto production and keeping the supply artificially low.

Analysts believe that the record-breaking consumer prices for new and used vehicles, as well as rentals, will continue into next year, and may not drop back to earth until 2023.

Global parts shortage does not include computer chips. The shortage of wiring harnesses as well as plastics, glass and plastics is becoming a problem for automakers. As a result of the resurgent virus, essential components for goods such as farm equipment and industrial machinery, sportswear, and kitchen accessories are being held hostage at ports all over the globe.

Glenn Mears, who owns four auto dealerships in Canton, Ohio, said that it appears like it will get harder before it gets easier.

General Motors and Ford are being squeezed by parts shortages. They have announced closures of multiple North American factories within one or two weeks. Some of these factories produce the hugely successful full-size pickup trucks.

Last month, the shortage of semiconductors and other parts became so severe that Toyota felt obliged to announce that it would reduce production in Japan and North America by at least 40% for two months. This resulted in a drop of 360,000 vehicles globally in September. Toyota, which has largely avoided the sporadic factory closings that have plagued competitors this year, now anticipates production losses through October.

Nissan, which announced in August that it would close its huge factory in Smyrna (Tennessee) due to chip shortages, has now said the closure will continue until Sept. 13.

Honda dealers are anticipating fewer shipments.

"This is a fluid environment that is impacting all industry's global supply chains, and we are adjusting production accordingly," stated Chris Abbruzzese (a Honda spokesperson).

This means that vehicle buyers now face unimaginable price increases. In August, the average price for a new vehicle in the U.S. was just over $41,000, nearly $8,200 higher than it was two years ago. J.D. Power estimated.

Automakers don't feel under any pressure to reduce their vehicles because of high consumer demand. Automakers were forced to save their computer chips and route them to more expensive models, such as pickup trucks or large SUVs. This has driven up average prices.

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