For the auto industry, 2022 will pick up where 2021's problems left off
STEVE INSKEEP, HOST:
People shopping for cars know that prices are high, if you can find a car at all. NPR's Camila Domonoske covers cars and is here to tell us what might lie ahead for 2022. Camila, good morning.
CAMILA DOMONOSKE, BYLINE: Good morning, Steve.
INSKEEP: I gather you've been shopping for a car. How's it going?
DOMONOSKE: Not great. Prices are really ridiculously high out there right now, and dealer lots have a lot more pavement than they usually do. It's been like that for months. And, you know, just to talk a bit more about prices, the cars that are available are selling right now routinely for hundreds or thousands of dollars over sticker price, which once upon a time was completely unimaginable.
DOMONOSKE: And just to drill in here on one example - Kia Telluride, right? This is a nice SUV, but it's not some super-luxurious, super-rare sports car. It's averaging 6,000 to $8,000 over the suggested retail price, according to Consumer Reports. And I spoke to a car buyer, Jackie Sisouphonh, who bought one for his family earlier this year.
JACKIE SISOUPHONH: We paid almost 20 grand markup on it. It should've been a $50,000 car, and it was a $70,000 car.
DOMONOSKE: So it really is just ridiculous prices that the people are seeing out in this market right now.
DOMONOSKE: And it's driving people out of the market, like me. It's making people travel across state lines to find a vehicle and waiting months or - weeks or months to get delivery.
INSKEEP: I just want to underline how big a deal this is. That guy just referred to a $50,000 car. Normally you'd bargain. You'd get it to be a 45,000, $42,000 car or something like that, and instead it's a $70,000 car. It's going in the exact opposite direction. So why is there this shortage of cars that's driving this increase in prices?
DOMONOSKE: Well, we have talked about this a lot this year, Steve. It's the shortage of computer chips. These tiny, little semiconductors are everywhere in vehicles these days. And I spoke to Chris Paredis at Clemson University earlier this year. He explained that it's not just the obvious places, like the touch screens.
CHRIS PAREDIS: For instance, most vehicles now have a pressure sensor inside the tires. The seats themselves have definitely lots of sensors.
DOMONOSKE: That's how a car can warn you that you need more air in your tires or beep at you to put on your seat belt. But all these semiconductors, they were among the products that were super disrupted by the pandemic when demand went away and then came roaring back. The entire supply chain got out of whack, and it hasn't recovered. So right now, automakers are producing millions fewer vehicles than they would like. Supply is down. Families that are well-off have a fair amount of cash on hand, and it's just pushing these prices sky-high.
INSKEEP: You know, when I first started hearing about this chip shortage many, many months ago, I thought, well, this is going to last a few months, and they're going to make more chips, and it's going to work out. Is that happening?
DOMONOSKE: It's gradually getting better, but I've seen forecasts saying we're going to be months longer, maybe even 2023...
DOMONOSKE: ...Before things are normal. So if you are looking for a car, be flexible. You're not going to find exactly what you want.
INSKEEP: OK, so what else can we look for in the year ahead besides a continued shortage of cars?
DOMONOSKE: Yeah. Well, one of the big stories is a dramatic increase in electric vehicle production. Every manufacturer from Ford and GM to a bunch of buzzy new startups - they're chasing after Tesla and racing to bring electric vehicles to market as soon as possible, although chips are also getting in the way of that a bit.
INSKEEP: Camila, thanks so much. Really appreciate it.
DOMONOSKE: Thank you.
INSKEEP: NPR's Camila Domonoske covers cars.
(SOUNDBITE OF MOKHOV'S "SUPER LOVE GRAVITY")
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