America’s demand for new cars remains high. But manufacturers built almost 2 million fewer cars last year than in 2019 (the last pre-pandemic year). The numbers were low largely because of a global shortage of microchips. It has begun to ease, but slowly.
Automakers remain unable to produce new cars fast enough to meet demand, keeping prices high. For some models, they’re stripping features to keep production going.
Next week, GM will slow production of its two hot-selling large pickups, the Chevy Silverado and GMC Sierra, due to a slim supply of chips.
Many automakers, meanwhile, are simply producing cars without some advertised features. Ford, for example, is producing its Explorer SUV without rear-seat climate controls to stretch its available supply of chips.
Cadillac has limited the availability of some options to conserve chips. The Cadillac CT4, CT5, Escalade, XT4, XT5, and XT6 are all shipping without some combination of heated seats, heated steering wheels, and parking assist features this month.
How This Happend
The global problem affects many industries, though it has hit carmakers particularly hard.
Today’s cars contain dozens of microchips. Some control critical engine and transmission functions. Others help you change the radio station with voice commands or make sure the steering wheel stays warm in your hands.
But the COVID-19 pandemic left microchips in short supply. Chip factories slowed production due to sick workers. When they re-opened, they faced huge orders for chips used in devices that workers needed to work from home and that students needed to attend school on a screen.
Automakers, meanwhile, reduced their orders, knowing homebound drivers wouldn’t be shopping for new cars.
When vaccines and an economic recovery made car shopping an option again, chipmakers were inundated with orders. They still haven’t caught up. That leaves automakers with a choice – build fewer cars, or build them with fewer options.
Experts say the problem could last into 2023.