Shortage of cars: why the market will normalize only until 2023 – Sectors – Economy

For several months, buyers of new vehicles They have been finding answers such as that the color they like is not available or that the car they want may take at least three months to arrive in the country, while its production ends.

The foregoing because in the midst of a global reactivation process, in which people are making purchasing decisions again, the supply of automobiles remains at levels lower than those before the covid-19 pandemic, due to factors derived from of the global logistics crisiswhich has not only increased the value of freight, but also because the availability of products such as semiconductors and auto parts is limited.

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Both in Colombia and in the rest of the world, large automobile manufacturers such as Nissan, Kia, and Toyota, reported a decrease of up to 50 percent in production, generating a strong blow for an industry that, as the partner of The CMS Rodríguez-Azuero firm and foreign trade expert, Santiago Arbouin, represents 3 percent of world GDP and had its Achilles heel not only in the pandemic, but also in a logistics chain that was already in disarray.

And it is that, during the last two years, the industry went from giving priority to the manufacture of chips and semiconductors (essential for the operation of cars), to the production of technological devices such as appliances, cell phones, ipads and computers necessary for education and teleworking, which were adjusted to the needs of the quarantine.

“There is a great shortage in the availability of the necessary materials for the production of all types of vehicles, which implies that the cost of these increases considerably.”

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For this reason, the production of these chips for cars was stopped taking into account the decrease in demand, while the need to produce electronic devices increased by almost 11 percent.

This phenomenon has generated that, as in the rest of the world, prices increase significantly, as well as waiting times for new cars or spare parts.

“A situation that has seriously affected marketers and buyers, since there is a great shortage in the availability of the necessary materials for the production of all types of vehicles, which implies that the cost of these increases considerably, as well as waiting times to obtain them,” explained Arbouin.

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In the case of Colombia, according to the most recent Dane inflation report, the new or used private vehicle expense group had a price increase of 1 percent in May, above the 0.84 percent variation that it showed inflation for the month, while in the last year the increase in prices was 13.2 percent, also exceeding the 9.07 percent in which the annual inflation closed until May.

volatility will follow

According to Santiago Chamorro, executive president for South America of General Motors, the world is still going through a supply shock that has led to an increase in prices on a global scale and this is aggravated by the event of the war in Ukraine.

According to the businessman, the issue will continue to be volatile for several months in terms of supplies and components, logistics and supply of semiconductors, because in the face of virtuality, the demand for the latter grew in such a way that it allows a shortage and something is still seen vulnerability in that sense.

“It is going to be an issue with emotions and we are really concerned about doing our best to turn around our production and logistics chain as quickly as possible and we ask our
dealers doing the same to get those vehicles to customers as quickly as possible,” he added.

And he pointed out that currently there is still a low inventory still in the dealer network, but in any case he invited consumers to visit the windows.

“Little by little it will recover, but we are quite far from a normal level of inventories in the networks in general in the country and it will continue to be volatile for the next few months. It’s a puzzle game every month,” he stressed.

Meanwhile, the expert Santiago Arbouin maintains that this situation is really unrelated to the internal policies of each country and is affected by different circumstances that need to return to normality in foreign trade, for which there is also pressure on the prices of used vehicles, especially those of recent manufacture.

“The palliative measures that can be taken to reduce the effects of the increase in waiting times and prices are reduced to opting for used cars, despite the fact that their price is not very attractive either,” he explains.

He also points out that another option could be to choose to buy the car models that are used on display and without taking into account the specifications of one’s own tastes, since the changes in the cars imply a longer wait.

That is, if you think about buying a car in the near future, you should choose to request it immediately to reduce the waiting period or postpone the purchase until the end of this year.

Although the situation will not be solved in the short term, not only due to the availability of semiconductors and chips but also due to the delay in the international transport of goods derived from the container crisis, it is expected that this situation will be regulated by the year 2023 and at the beginning of 2024 depending on the stabilization of the different effects of covid-19 and the direction of foreign trade policy.

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