Computer chip shortage hits Detroit


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The worst crisis for automakers in 50 years has left dealers with little to sell as consumer prices rise.

GM trucks are parked at the site of the former Auburn Hills Palace outside Detroit.  Trucks are waiting for the missing computer chips.
GM trucks are parked at the site of the former Auburn Hills Palace outside Detroit. Trucks are waiting for the missing computer chips. (Brian Day/for The Washington Post)


DETROIT. These days, even Motor City doesn’t have enough cars.

Recently, the rental offices at the Detroit airport ran out of cars. Dealerships across the city are reporting shortages. And buyers face months of delays and skyrocketing prices before they can get their hands on a new truck or SUV.

The root of the problem is the same across the country – a global shortage of computer chips that has forced automakers to cut production, resulting in a shortage of new and used cars. But the predicament here seems especially hurtful, Detroiters say.

“This is a city of automakers. There should be no shortage of cars,” said Benyam Tesfasion, a taxi driver who brought travelers from the airport to pick up rental cars at locations 10 or 20 miles from the airport. Another feature of his daily commute, he says, is passing giant parking lots where automakers are stockpiling new cars that are still waiting for the last few chips.

Detroit’s experience shows how nearly two years of semiconductor shortages have completely upended manufacturing and forced change in one of America’s most beloved consumer markets.

“This is possibly the biggest crash we’ve seen since the 1970s and the fuel crisis,” said Matt Anderson, a transportation historian at the Henry Ford Museum Complex in Dearborn, referring to the tumultuous period that forced car companies to produce more fuel. economical cars.

The chip shortage “is something that my successors, I’m sure, will look into in the future,” he added.

Used car market in chaos due to rising prices

Gone are the days when shoppers could walk into a dealership and drive home in a cherry red convertible with their favorite features. Buying a car now means placing an order and waiting, sometimes for months, for the car to arrive.

Also gone are the days when buyers could count on affordable wheels. According to data provider Cox Automotive, the average list price of a new car in the US has risen 20 percent to $45,975 over the past two years. The average used car price rose even more, up 40 percent, to $28,012.

These spikes have been a major factor fueling inflation, which hit a 40-year high last month. The new car is becoming more of a “luxury item for the rich,” said Charlie Chesbrough, senior economist at Cox Automotive. “For a family with an income of $60,000 or $70,000 a year, you can’t afford a new car.”

According to consulting firm AlixPartners, the global auto industry produced 8.2 million vehicles less last year than it would without the chip shortage. And the outlook for 2022 remains bleak, with automakers forecasting just 14.4 million new U.S. car sales, compared to about 17 million in 2019.

A year ago, Chevy dealer Paul Zimmermann had about 700 new cars for sale near Detroit. Today he is about 25.

It used to be “if you were a customer, you could go look for a black blazer or a silver blazer. White. One without a hatch. One with a sunroof. Now they are almost gone,” said Zimmermann, who bought the dealership in February 2020. “So he really doesn’t have the option to shop in person.

This changed everything for a dealership called George Matick Chevrolet, which opened in 1967 and is one of the largest Chevy dealerships by area in the United States.

Instead of stopping by to view available vehicles, customers now place orders and wait, sometimes for months, for their vehicles to arrive. Instead of working in a showroom, sales people now spend hours tracking their customers’ vehicles online, trying to see when they are discontinued and made available for pickup.

On a recent Monday morning, the dealer had 183 vehicles in the General Motors system that were almost complete but were still missing some of the final components. According to Zimmermann, GM coined a new term for them – “shy assembly” – because they are built without parts.

It has changed the car buying process, which is often an emotional decision, Zimmermann said.

Plenty outside of Detroit contains hundreds of new GM trucks waiting for computer chips. (Video: Brian Day for The Washington Post)

“There is still a lot of desire to have that tactile experience, you know, to touch, touch, smell, test drive,” he said. Customers ask, “Do you have one where I can just come and sit in it? Do you have one where I could just ride it? Do you have one where I can just look at it?”

“In the absence of that,” he said, “I think it prevents some people from making a decision.”

The Detroit Pistons have not played at the Palace of Auburn Hills suburban arena since 2017, and the building itself was demolished in 2020. the dealers said the chips were missing. The guards declined to comment.

Asked about the batch, GM spokesman David Barnas pointed to the company’s recent announcement that chip shortages and other failures left it with 95,000 unfinished vehicles that it intends to complete and sell to dealers by the end of the year. GM keeps cars “in secure parking lots” near its plants, Barnas said. He added that in the long term, the company aims to reduce the number of unique semiconductors needed to ensure a more reliable supply.

Similar fleets of unfinished cars are hidden all over Detroit and beyond. An auto industry executive said he recently saw thousands of trucks parked around a GM plant in Silao, Mexico. A former factory worker told him that the cars were missing chips.

Behind a low-rise office park outside Ford’s Dearborn headquarters in recent days, there were about 50 F-150 trucks lined with new car stickers. Security guards told The Washington Post that the cars belonged to Ford and that the parking lot, which could hold about 1,200 cars, had been filled days earlier.

Ford spokesman Said Deep did not respond to questions about the trucks, but said “the entire industry has been addressing global commodity and chip issues for over two years.”

“We continue to work to ensure that our vehicles are delivered to our customers as quickly as possible. … It stays liquid,” he said.

The problem does affect most automakers. Tesla was the only major company to increase year-over-year sales in the U.S. in the first half of 2022, according to Cox Automotive data, with sales of Honda, Nissan and Volkswagen falling by more than 30 percent, largely due to issues with supplies.

Shortages are forcing Detroit buyers to compromise—even those who make a living assembling cars.

Ahiana Elliott, a Chrysler plant worker in east Detroit, is looking for a new car. A car enthusiast since childhood, she already owns two Corvettes and a Camaro, but she wanted a “winter car” that could handle the Michigan snow, she said as she browsed the cars at Bob Maxey Ford, a downtown dealership near the Detroit River.

“My dad said, ‘Never have a reason why you can’t get to work. If one car won’t start, get another one,” said Elliott, who spends her free time meeting other car enthusiasts at a local Corvette club.

She set her sights on the new Ford Bronco, but heard that it would take a year or more. So now she’s eyeing used cars, but high prices and rising interest rates shock her. There aren’t many choices on dealer lots either.

“It’s terrible. There’s nothing available,” she said.

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At a Chevy dealership in suburban Auburn Hills, Lauren Fisher was getting ready to buy out the lease on her Equinox SUV rather than trying to buy a new car.

“With the car I currently rent, I got everything I wanted: leather seats, sunroof, heated seats and steering wheel,” she said. “If I rent it again, I guarantee I won’t find it. I’m going to build it or it will take forever to get it.

Labor shortages and a meager supply of materials other than wood chips are also shutting down production at automakers and suppliers, but wood chips are the most pressing problem, industry leaders say.

When an automaker is missing one piece of the puzzle, it can suddenly shut down production and cause dozens of suppliers to idle at its plants, leaving everyone frustrated, said Thomas Koval, president of Troy, Michigan-based global consulting firm Seraph. have been busy advising automakers and suppliers on how to deal with shortages.

An automaker might suddenly say to suppliers, “Hey, we don’t need to start production on Friday,” Koval said. Then on Saturday, he can demand that suppliers bring in their workers to stamp parts over the weekend. “It’s like a yo-yo, all the time,” Koval said.

Uber driver Ljupko Stefanovski, who used to work as a porter at a Chrysler plant, said he saw the glitch while driving Ford workers to and from shifts at the Wayne plant. Sometimes when he picks them up, they say they’re being sent home early. “No chip, no job,” they tell him.

Some car executives are also listening to chips. “A couple of months ago I drove this guy – he worked at Ford, he worked at Kia, Hyundai,” recalled Stefanovski, who immigrated to the United States from North Macedonia. “He said, ‘Why don’t we build [chip] factories are here, so we won’t have this problem?

Stefanovski rents his car through Uber because he can’t afford to buy one.

“You can’t even think about buying a car anymore – even a used car goes up 40 percent,” he said. “These two, three years are like going backwards. It’s not the same anymore.”

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