Brent Huisman has been in the auto finance industry for over 22 years beginning with GE Capital Auto Financial Services. From there Brent went to run part of the Remarketing and Loss Mitigation departments at Bank One which was later purchased by Chase Auto. Brent has also worked for KAR Auction Services as VP of North America Dealer Sales. Since 2007, he has worked on several retail and lease portfolios such as HSBC before running Repossession and Remarketing for Exeter Finance. Brent holds a BBA of Marketing from the University of Iowa as well as an MBA from Benedictine University from Chicago, Il.
Before knowing, what is a car chip? Let’s take a brief into a semiconductor chip, which is also known as a microchip. A semiconductor chip serves the purpose of being the brain of new-age electronics technology. And, the semiconductor chips used in modern cars are said to be car chips. Due to the pandemic, there has been a great shortage of semiconductor chips. This is mainly due to the effect it has on the supply chain industries. While this is one of the reasons why there is a shortage of car chips in the auto industry, there are other strong reasons for the shortage.
Reasons for the shortage of car chips in the auto industry
- The automobile industry is growing exponentially day by day. And. with growing developments in automobile sectors, the demand for the usage of car chips in modern cars also grows, especially with the introduction of electric cars in the market. Every automobile company out there in the market introduces new and great features, with every new release of any automobile, be it a new car, truck, or any other vehicle.
- The pandemic affected the supply and demand as well as the forecast of the future in the automobile industry. With the shutdowns and spread of the virus, the automobile manufacturers questioned the future of their industry and canceled the microchips for automobiles to stop further loss. But the thing they forgot to anticipate is that the downfall of their industry was for a short time. The demand for cars indeed dropped greatly but it was temporary.
Well, you might wonder if the supply was cut off, the manufacturers could resume their supply once again and start producing the new cars in the market. Well it is not as easy as it looks, here is why.
What is stopping manufacturers from making more car chips to meet the demand?
Well, producing a semiconductor is a very complex task. And, the process is very time-consuming as well as it is expensive. Let alone for this reason, there are only a few semiconductor chip manufacturers in the world. And, all those manufacturer companies are running at their full capacity at this current date. Well, now you might have questions like why is it difficult to set up a new semiconductor manufacturing industry. Well, the answer is that it takes a huge amount of investment let’s say in billions. In addition, it takes years of planning before adding foundries.
Effect on car prices due to shortage of chips
Over the past few years, it is been seen that the shortage of semiconductor chips has become directly proportional to the shortage of new cars. A lot of small automobile manufacturers have to shut down their production. A shortage in the supply of new cars in the market means the manufacturers can sell the cars at a higher price than the MSRP (manufacturer’s suggested retail price), but the users can get the advanced benefits of buying the new car. After understanding the reason behind the shortage of car chips in the automobile industry and issues faced by the manufacturers, you have the opportunity to book your car with the advanced features.
Brent Huisman has been in the auto finance industry for over 22 years beginning with GE Capital Auto Financial Services. From there Brent went on to run part of the Remarketing and Loss Mitigation departments at Bank One which was later purchased by Chase Auto. Brent has also worked for KAR Auction Services as VP of North America Dealer Sales. Since 2007, he has worked on several retail and lease portfolios such as HSBC before running Repossession and Remarketing for Exeter Finance. Brent holds a BBA in Marketing from the University of Iowa as well as an MBA from Benedictine University in Chicago, IL.