After automakers cancelled semiconductor chip orders in early 2020 at the start of the pandemic, the industry reallocated those resources to the personal electronics market, as sales of computers and other personal devices used for teleconferencing, work-from-home, and home-class-study soared. Once the pandemic passed, and automakers began ordering chips again, manufacturers were no longer set up to produce them quickly, and a backlog of orders quickly turned into a shortage. Analysts predict the shortage will not end until 2023.

In January, the Commerce Department reported there was just a median 5 day supply of chip inventory, compared to 40 days pre-pandemic.

The U.S. House of Representatives passed the America Competes Act of 2022 on February 4th. It contained $52 billion to support chip manufacture and research and $45 billion for easing supply chain issues. The bill is awaiting approval in the Senate.

Meanwhile Toyota had announced that due to supply chain issues they cut March production by 200,000 vehicles globally. Other carmakers like GM began selling incomplete vehicles with missing features which were previously standard equipment. Ford has also announced they will offer incomplete vehicles.

At the local level, even though they are selling fewer cars, many dealers are seeing record profits. Demand for pre-owned vehicles drove used car prices up over 40%, as the used car market soared.

Used car prices in January exceeded $28,000, based on Cox automotive data, as used cars under $10,000 have been the hardest to find.

Until the chip supply problems are eased in 2023, the used and new vehicle markets will remain inherently unstable and buyers will have to hunt for deals.