Supply Chain Issues Causing More Inflation In the Car Industry

Not many industries have felt the wrath of the supply chain induced inflation like the car industry has. Analysts are fearing it may go on for longer.

Because of the inflation, the industry has resulted in record-low inventories on many new car lots. Remember when you’d drive by and see a lot full of cars? Yea, not anymore unfortunately… This has raised the demand of vehicles which is why used car prices have raised through the roof.

Chip Shortages

Chip supplies were waning thin before the pandemic happened, but now it’s hit the breaking point! Luckily, some industries have said they have fewer chip shortages but problems are still expected to persist for another year.

As suspected, the chip shortages aren’t only in high demand in the auto industry. The demand of semiconductors has increased with phones, computers, smart home devices, and the online mining industry.

The chip industries such as Intel are planning to get supply back to normal but the plants will take years to come online. Unfortunately there will likely be a waiting period to get the industries back on track.

Parts Shortages

Costs in the auto industry have been rising all across the board. With global panic, strife, and the ongoing pandemic shut downs, all the materials that factor into making a vehicle have gone up in price.

According to the St. Louis Federal Reserve, parts as a whole have increased over 17% this past year.

More issues such as the Russia invasion and the rise of Electric Vehicles are also adding fuel to the fire. Ukraine was a supplier of neon gas which is a huge component to many of the components in modern vehicles. Lithium, nickels, graphite, and cobalt are also in a global shortage which is causing inflation on their end.

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