The shortage of semiconductor chips has been a well-known problem in the automotive industry for the past year and a half. A shortage of chips has held up auto shipments, leading to significant increases in the prices of new and used cars and trucks. However, chip shortages aren’t the only problem for automakers, according to CNN.
Investment: Ford invests $ 11.4 billion in ‘largest US investment ever’ in electric vehicles – analysts reiterate ‘Buy’ rating
Find out: when will the flea shortage end? Experts weigh
Manufacturers have struggled to get their hands on other critical parts and raw materials, due to factory closures by suppliers, logistics issues involving shortages of ships, shipping containers, and truck drivers, and difficulty finding workers, CNN reported.
AlixPartners, a consulting firm, now estimates that supply chain issues will reduce automotive production by 7.7 million vehicles worldwide. This is a significant increase from the shortage of 3.9 million vehicles that was forecast in May.
Discover: 4 critical areas affected by the chip shortage
High demand and tight supply are pushing car prices through the roof. According to Kelley Blue Book, a vehicle valuation and automotive research company, the average price paid for a new car in August reached $ 43,355, an increase of almost 10% from the previous year. About 1 million cars were purchased that month – the lowest monthly sales totals in a decade.
For used cars, the average list price increased 25% in one year, to reach $ 25,829. Wholesale prices are also up 24.9% since September 2020.
Related: An iPhone May Be Your Only New Smartphone Option As Chip Shortages Dominate Manufacturing
The lost sales are also costing automakers nearly $ 210 billion this year, as previously reported by GOBankingRates. That’s about double the initial May estimate of $ 110 billion. And that’s not all, as automakers will also have to pay $ 150 billion in increased costs for parts and raw materials, CNN added, or about $ 2,000 per vehicle.
In total, it’s a blow of $ 270 billion to automakers while consumers collectively pay $ 90 billion in higher prices.
Survey: Grocery Shortage Costs Fall on U.S. Consumers – and 64% Are Fed Up
Stimulus for Seniors: How an Additional $ 1,400 Check Could Help Social Security Recipients Cope with Rising Grocery Costs
“There really are no more shock absorbers in the industry right now when it comes to producing or procuring material,” Dan Hearsch, CEO of AlixPartners, told CNN. “Virtually any shortage or disruption in production in any part of the world affects businesses around the world, and the impacts are now magnified because of all other shortages. “
More from GOBankingTaux
Last updated: September 29, 2021
This article originally appeared on GOBankingRates.com: 7.7 Million Global Vehicle Shortages, Doubling Estimates: Consumers To Pay $ 90 Billion In Higher Costs