First No Gas, Now No Cars
Posted May 28, 2021
If you snagged a new or used car in the last six months, count yourself lucky. You would probably pay 20% more for the same thing today, provided you can find one. Many people cannot even find one to buy at any price, and they are just now discovering this.
Your old truck breaks down. You call up your favorite salesman at your favorite dealership. Nice guy, always takes care of you. “Get me another one right away,” you say with excitement. He has bad news. There are months-long waits, at exorbitant prices, if you are lucky to get anything at all. Used perhaps? Sure but be prepared to pay far more than Blue Book.
Next option: fix the truck. You head to your favorite mechanic. You need some parts. They aren’t in stock. None of the car-part stores in town have what you need. Looks like you can order it. Estimated delivery in 30 days. Even so, the shop can’t really work on it for another 45 days. The mechanics who used to come to work disappeared during the lockdowns and did not come back.
Here we come Facebook marketplace and Craig’s List. There seem to be some cars here that you can purchase. But then you begin to notice something. Most of them have some mechanical problem. Maybe it is an air conditioner, a headline control, an airbag, or a brake calliper. Why not get it fixed before putting it on the market? It’s the same problem: the parts aren’t available, and service is in short supply.
So, sure, you can buy that car, and risk having the tires turn into a fiery inferno on the highway, or can only drive in the daytime, or only with the windows down. It certainly won’t pass inspection in a state that requires everything to work properly before you drive.
Hey, maybe just rent for a bit? Sorry. Those are gone too.
What are you supposed to do? You make do. If you have family nearby, you can do a car shuffle for a while. Just waiting for those chips to arrive. It’s a problem that we’ve never seen in our lifetimes. Just another anomaly, just another sign of the times.
The Great Chip Shortage
The shortage has been quietly building for months. Sales people have been trying to keep it under wraps to forestall panic buy, doing to cars what happened to toilet paper last year. It’s happened anyway. Even in Texas, where vast real estate is devoted to an ostentatious display of a mighty, vibrant, and beautifully capitalistic industry.
Now these lots are useless real estate. The salespeople indoors who work mostly on commission? They are sitting on piles of orders. They take phone calls all day. They have never seen such demand for the very thing they sell. It’s a dream come true for any person in sales but there’s one problem : they don’t have any product to push out. If a car or truck arrives on a lot, it is whisked away in minutes, first come, first serve.
Relief is not coming soon. Major manufacturers have given up just waiting for chips to complete production on existing stockpiles, and actually halted production completely.
It gets crazier. Some automakers are actually dialing back features just so that they can ship cars. BloombergQuintreports:
“Carmakers are also building vehicles with less technology. Peugeot is going back to old-fashioned analog speedometers for its 308 hatchbacks, rather than use digital versions that need hard-to-find chips. General Motors Co. said it built some Chevrolet Silverado pickup trucks without a certain fuel-economy module, costing drivers about 1 mile per gallon. Nissan is cutting the number of vehicles with pre-installed navigation systems by about a third.”
Fascinating, isn’t it? Take this far enough and you eventually look like Cuba, where automotive progress stopped with the advent of socialism. Broken markets do that.
Ok, all of this cries out for explanation, but you have to look long and hard. The secret is revealed in a Car & Driver piece, but just in passing. In the Spring of 2020, the COVID lockdowns shut down the retail side of the industry. Business collapsed. Manufacturers stopped getting orders for cars, and they obeyed their usual just-in-time inventory protocol. They cancelled their standing orders for microchips. No big deal, right? When the time comes, they will just click more and boom, everything restarts.
Come fall, demand for cars blew up. People were driving again, not flying. They were desperate to get out of the house. Also by now began the great migration of the cities and lock-down states into more open areas or rural areas where cars are more necessary. The industry turned on a dime. No problem, right? Yes, big problems. There were no chips available at all. The factories in Taiwan, Hong Kong, and China had already retooled.
The conventional line is that the whole shortage is caused by a fire in Japan, and a water shortage in Taiwan, in the same way that a drought was always blamed for the wheat shortage in the old Soviet Union. Yes, there are always accidents. Yes, such exigencies exacerbate shortages. But markets that are decentralized with multiple supplies correct for such risks. They do not normally disable supplies worldwide as they have this time.
There is no getting around it. What the political class, under the advice of “science,” did in the spring of 2020 wrecked a delicate global network of markets. Markets are good at dealing with crises but less good when trade is actively shut down by government force. I had a profound sense of foreboding at the time. My god, what will this unleash?
We are just now finding out the fullness of the hell created by these egregious dictates for which there are few today willing to take responsibility. And consider how difficult this is for people to follow and discern the cause and effect. People want to buy a car. There are none. I’m in the backseat saying: “Here is another consequence of lockdowns,” and people tell me to shut up.
A year and a half ago, no one could have predicted a global shortage in a basic transportation tool that defines modern life as we know it. Nor could anyone have predicted a frightening mental health crisis, or devastation in health and wealth generally that would flow from unprecedented policies.
The policies of last year are spreading like an evil cancer this year. First gas, then cars. Housing and rent are in upheaval too. What’s next? Food? Medicine? I shudder to think.