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Computer chip shortage hits Detroit

The worst crisis for automakers in 50 years has left dealerships with less to sell as prices rise for consumers.

GM trucks are parked at the former Palace site in Auburn Hills outside of Detroit.  Trucks await missing computer chips.
GM trucks are parked at the former Palace site in Auburn Hills outside of Detroit. Trucks await missing computer chips. (Brian Day/For The Washington Post)


DETROIT — Even the Motor City is running out of cars these days.

Detroit airport rental counters have been running out of cars lately. Dealers across town are reporting scarce inventory. And buyers face months of delays and price hikes before they can get their hands on a new truck or SUV.

The root problem is the same across the country — a worldwide shortage of computer chips that is forcing automakers to cut output, causing a shortage of new and used vehicles. But the predicament feels especially poignant here, Detroiters say.

“This is a car manufacturing city. There should be no shortage of cars,” said Benyam Tesfasion, a cab driver busy shuttling travelers from the airport to pick up cars at locations that 10 or 20 miles away. Another part of his daily commute, he said, is driving past the giant parking lots where automakers stockpile new production cars that are waiting. still some last chips.

Detroit’s experience shows just how completely a nearly two-year semiconductor shortage has boosted manufacturing — and sparked change in one of America’s most beloved consumer markets.

“This is probably the biggest disruption we’ve seen since the 1970s and the fuel crisis,” said Matt Anderson, a transportation historian at the Henry Ford museum complex in Dearborn, referring to the turbulent times that forced companies to cars that will make more fuel- efficient cars.

The lack of a chip “is the kind of thing that I’m definitely going to be studying for years to come,” he added.

The used car market is in turmoil as prices soar

Gone are the days when buyers could drop into a dealership and drive home to a cherry-red convertible loaded with their favorite features. Buying a car today means placing an order and waiting, sometimes for months, for the car to arrive.

Gone are the days when buyers could rely on finding cheap tires. The average US list price for a new car has risen 20 percent in the past two years, to $45,975, according to data provider Cox Automotive. The average for a used car rose even more – by 40 percent, to $28,012.

Those spikes are a key factor in inflation, which hit a 40-year high last month. A new car is increasingly “a luxury product for the rich,” said Charlie Chesbrough, senior economist at Cox Automotive. “For a $60,000- or $70,000-a-year household, you can’t afford a new car payment.”

The global auto industry produced 8.2 million fewer vehicles last year than it would have without the chip shortage, according to consulting firm AlixPartners. And the outlook for 2022 remains bleak, with automakers projected to sell just 14.4 million new cars in the United States, up from roughly 17 million in 2019.

A year ago, Chevy dealer Paul Zimmermann had about 700 new cars for sale on his lot outside Detroit. Now he has about 25.

In the past, “if you were a customer, you could look at a black Blazer or a silver Blazer. A white one. One without a sunroof. One with a sunroof. Now it’s almost gone,” Zimmermann said, who bought the dealership in February 2020. “So there is no ability to shop in person.

That changed everything about the operations of the dealership, called George Mattick Chevrolet, which opened in 1967 and ranks among the largest Chevy showrooms in square footage in the United States.

Instead of dropping by to browse available vehicles, customers now order and wait, sometimes for months, for their cars to arrive. Instead of working on the showroom floor, sales staff now spend more time tracking their customers’ vehicles online, finding out when they will be out of production and available for pickup.

As of a recent Monday morning, the dealership had 183 vehicles in the General Motors system that were nearly complete but still missing some final components. GM coined a new term for those, Zimmermann said – “build shy” – because they were built shy of parts.

That has changed the car-buying process, which is often an emotional decision, Zimmermann said.

Many outside Detroit have hundreds of new GM trucks waiting for computer chips. (Video: Brian Day for The Washington Post)

“There’s a lot of desire to have that tactile experience, you know, to touch, feel, smell, test drive,” he said. Customers ask, “Do you have one where I can go and sit on it? Do you have one I can take for a drive? Do you have one I can look at?”

“Without that,” he said, “I think that prevents some people from actually making the decision.”

The Detroit Pistons haven’t played at the Palace of Auburn Hills, a suburban arena, since 2017, and the building itself is being demolished in 2020. But the parking lot on a recent Thursday was occupied by nearly 2,000 new GM trucks , that Chevy Dealers say the chips are missing. Security guards declined to comment.

Asked about the lot, David Barnas, a GM spokesman, pointed to the company’s recent announcement that chip shortages and other disruptions have left it with 95,000 unfinished vehicles, which it aims to complete. and will be sold to retailers at the end of the year. GM is holding the vehicles “in secure lots” near its factories, Barnas said. In the long term, the company is racing to reduce the number of rare semiconductors it needs to ensure more reliable supplies, he added.

Similar fleets of unfinished cars are hidden around the Detroit area and beyond. An auto-industry executive said he recently saw thousands of trucks parked around GM’s factory in Silao, Mexico. A former factory employee told him that the cars were missing chips.

In recent days, behind a small office park near Ford’s Dearborn headquarters are about 50 F-150 trucks with new vehicle stickers. Guards told The Washington Post that Ford owns the vehicles and that the lot, which can hold about 1,200 cars, filled up a few days ago.

Ford spokesman Said Deep did not respond to questions about the trucks but said “the entire industry has been dealing with global commodity issues and chip challenges for more than two years.”

“We continue to work to get our vehicles to our customers as quickly as we can. … It remains fluid,” he said.

The problem actually hits most automakers. Tesla is the only major company to increase US sales year-on-year through the first half of 2022, with Honda, Nissan and Volkswagen all suffering declines of more than 30 percent due largely to supply problems. , according to Cox Automotive.

The shortages are forcing Detroit-area buyers to compromise — even those who spend their days building cars for a living.

Ahyana Elliott, a factory worker at a Chrysler facility on Detroit’s east side, was in the market for a new car. A car enthusiast since childhood, he has owned two Corvettes and a Camaro but wanted a “winter car” that could handle the Michigan snow, he said while browsing cars at Bob Maxey Ford , a downtown dealership near the Detroit River.

“My dad said, ‘Don’t ever have a reason why you can’t work. If one car won’t start, another one will,’ ” said Elliott, who spends his free time meeting car buddies at the local Corvette Club.

He had his eye on a new Ford Bronco but heard the wait could be a year or more. So he’s now checking out used cars, but high prices and rising interest rates are giving him sticker shock. There isn’t much choice in dealer lots, either.

“It’s terrible. Nothing is available,” he said.

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At a Chevy dealership in suburban Auburn Hills, Lauren Fisher prepares to buy a lease on her Equinox SUV instead of trying to score a new car.

“In the car I’m renting now, I got everything I wanted: leather seats, sunroof, heated seats and steering wheel,” he said. “If I rent that again, I guarantee you that I will not look for it. I will have it done or it will take a while to get it.

Labor shortages and scarce supplies of materials other than chips are also halting production at carmakers and suppliers, but chips are the toughest problem, industry executives said.

If an automaker is missing a piece of the puzzle, it can suddenly halt production and force many suppliers to shut down their factories, causing everyone to fail, said Thomas Kowal, president of Seraph, a global consulting firm in Troy, Mich., offices busy advising carmakers and suppliers how to navigate the shortages.

An automaker can suddenly tell suppliers, “Hey, we don’t need to run production on Friday,” Kowal said. After Saturday it may be requested that suppliers haul in their workers to churn parts over the weekend. “It’s like a yo-yo, always,” Kowal said.

Uber driver Ljupco Stefanovski, who used to work as a porter at a Chrysler plant, said he saw this disruption when he drove Ford workers to and from their shifts at a Wayne factory. . Sometimes when he picks them up they say that they were sent home early. “No chip, no job,” they told him.

Other auto executives also bent his ear about the chips. “A month ago I was driving a man – He worked for Ford, he worked for Kia, Hyundai,” recalled Stefanovski, who immigrated to the United States from North Macedonia. “He said, ‘Why don’t we build [chip] factories here, so we won’t be in trouble?’

Stefanovski rents his car through an Uber program, because he can’t afford one.

“You can’t even think about buying a car – even used cars are up 40 percent,” he said. “In these two, three years, everything seems backward. It will never be the same.”

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