Impact of the Chip Shortage
Here’s How Honda’s Been Impacted by the Chip Shortage
The auto industry has been hit hard by the global microchip shortage. Honda and other major brands have had to slow down vehicle production, or stop it altogether. That’s why so many car dealerships have such low inventory. Here’s what to know about the shortage and its impact on Honda:
What are microchips?
The chips are tiny transistors made from silicon that are used in electronic devices, like your phone and computer. They’re also used in all modern cars. They run everything from your car’s touchscreen display to its safety features, and so much more.
Why Are Computer Chips Important for New Cars?
You might remember when your most sophisticated piece of electronic equipment in your vehicle was your car stereo or maybe that dash-mounted radar detector. That’s not the case any longer. Modern cars have more technology than ever before, and we can expect in-vehicle, safety, and entertainment technology to continue to grow in the auto industry.
You’ll find electronic chips in nearly every element of your car. Transmissions now use electronic technology to shift gears and deliver power. Advanced driver-assist systems use various sensors to collect information and rely on computer chips to process the data and communicate that to other vehicle systems like braking, steering, suspension, and more. And all those systems have electronic components, too.
Most infotainment systems feature new technology that syncs your iPhone or Android with Apple CarPlay and Android Auto. These systems rely on chips to link and operate your smartphone, so you can make hands-free calls, access your favorite apps, and stream your playlists while you cruise to and from work. Built-in navigation systems need processing chips to link to satellites and download traffic data and routes.
Why is there a shortage?
Due to the COVID-19 Pandemic market conditions have impacted the automobile industry in ways we’ve never seen before. The snowball effect began when automobile factories shut down for several months, through no fault of their own. This shutdown resulted in lower inventory levels as people bought many available vehicles as businesses reopened.
Another snowball effect occurred when those chip manufacturers transitioned their production from supporting the auto industry to the computer segment. All those people that had to work from home needed computers, monitors, modems, phones, and more.
Automotive production facilities face the problem of not having the parts to complete the process, including chips, because the chip manufacturers have spent the last year trying to keep up with the computer segment demand.
The auto industry represented a small percentage of the chip manufacturing industry before the shutdown. With the additional demand for phones, computers, and other electronics, the chip manufacturers have struggled to keep up with worldwide demand. Political leaders have lobbied their counterparts in those countries with the most production, but the simple fact remains that demand has risen higher than current production rates. Many countries, including Canada, have created stimulus plans to encourage companies to build new factories, but that won’t immediately impact the current situation.
Weather and fire have played a role in the chip shortage. Taiwan experienced severe drought over the last months. The chip manufacturing process requires large quantities of pure water, severely impacting Taiwan manufacturers’ ability to produce chips. Storms in Texas forced three semiconductor factories to close temporarily. Even a recent fire shut down one manufacturer in Japan responsible for making chips in support of the auto industry.
How has it affected Honda?
Honda had to cut production early 2021 due to the chip shortage.
In the original shipments of the new 2022 Honda's, like the 2022 Civic, only come with one key fob instead of the usual two. If you lose or damage your key fob, your dealership will work to get you a replacement. Honda parts were in short supply but slowly catching up. So, the brand is handling all situations on a case-by-case basis doing their best to get what is needed asap. Those that only received one fob, second fobs will be sent out when they’re in supply. Fortunately now the new 2022's are delivered with 2 fobs .
How Has the Chip Shortage Affected the Used Car Industry?
With new inventory down and no immediate relief in sight, many people purchased used cars instead. This resulted in another inventory shortage in the used-car market. Dealerships have to pay top dollar for trade-ins or pay more at auctions to keep up with demand. This benefits consumers looking to purchase a new car and trade in their old vehicle. At Stratford Honda, we pay top dollar for your trade. Call our dealership 1-800-565-4955 or you can send us your information and we will let you know how much value is in your car.
We encourage you to browse our new car inventory on line or visit our dealership. It’s never been a better time to trade in your car and do our best to find you an upgrade!