What are car chips and what do they do?

In order to understand the car chip shortage and its impact on dealer inventories and the automotive industry, it is essential to first understand why these chips are such a vital part of today’s automobiles:

• Car chips are also referred to as microchips or semiconductors.  In modern electronics ranging from cars to smartphones, refrigerators to washing machines, and even electric toothbrushes these chips function as the “control center” managing the flow of electrical currents

• These chips are made using silicon and have a series of transistors that control the flow of electrons.  They are extremely small, with each transistor tens of thousands of times smaller than a human hair

• Microchips range widely in complexity, from simple chips found in the aforementioned electric toothbrush all the way to extremely advanced chips that control all of the cutting edge, state of the art technology and safety features in your new Subaru from Ertle

• Even basic chips can take several weeks to create, while more advanced chips can take several weeks to manufacture and there are currently only a handful of microchip plants in existence in the world today

• The solution is not as simple as just opening more chip plants and ramping up production.  Each new plant takes several years and millions of dollars to open

• When the COVID-19 pandemic hit, it affected not only chip production, with plants shutting down for several weeks at a time, but also global shipping

Why did the semiconductor shortage hit the auto industry so hard?

Reason 1: Modern vehicles are much more technologically advanced than their predecessors.  Your new Subaru from Ertle Subaru can require close to 1,200 chips to power all of the advanced safety, entertainment and performance features you’ve come to expect in your vehicle.

Reason 2: Prior to the COVID 19 pandemic and shutdowns of early 2020, chip demand was already beginning to outpace supply.  When shutdowns began, auto makers predicted this would lead to a sharp decline in consumer demand for vehicles and canceled many of their existing chip orders.  Instead, the opposite happened, and consumer demand for vehicles soared coming out of lockdowns in the summer of 2020.  When automakers attempted to place new microchip orders, they discovered that the majority of chip orders had been filled by tech companies and there were no longer enough chips available to keep vehicle inventory levels normal heading into 2021 and beyond

Reason 3:  Supply chain and transport issues this year continue to affect the shipment of semiconductors to auto manufacturing plants and isolated shutdowns at both chip and auto plants due to COVID-19 outbreaks and even natural disasters such as earthquakes also continue to disrupt production.  As a result, most new vehicles currently need to be custom ordered, with customer wait times ranging from three months to close to a year.  In turn, the lack of availability of new cars has increased both the demand for and cost of pre-owned vehicles,  Demand remains high, and supply remains low.

Is there an end in sight to the car shortage?

The answer varies depending on the source.  Some experts expect the situation to begin normalizing some time toward the end of 2022 while others have a more pessimistic outlook and predict the microchip and new vehicle shortage to remain an issue well into 2024.

In the meantime, Ertle Subaru Gives You More options to get your next new Subaru or pre-owned vehicle.  We are committed to providing our customers with hundreds of choices from our continually well stocked pre-owned inventory.  Additionally, we continue to help customers configure and build the new Subaru of their choice and place their factory order, whether that be in store or completely online.  We will even deliver your vehicle to you on our flatbed delivery truck for free!