Car manufacturing just can’t seem to get a break these past few years. With the obvious downturn due to the pandemic, Car manufacturers face even more setbacks due to mother nature and over whelming demand.
Earthquakes in Japan
Last week, a 7.4 magnitude earthquake slammed off the coast of Japan. Causing multiple chip manufacturers to stop production and start cleanup. The good news is most of these chip factories have finished cleaning up and are starting back with production.
Ukraine Neon Supply
Neon gas is an important ingredient used in the chip manufacturing industry. With the ongoing turmoil happening in Ukraine, Cryoin and Ingas (two major neon producers located in Ukraine) are forced to stop production. These two companies provide 45% to 54% of the world’s semiconductor-grade neon, which is used for the lasers to make the microchips.
Car Production Estimates
AutoForecast Solutions has estimated that 1.2 million vehicles have been cut from global production this year due to the ongoing chip shortage. This lack of supply will continue to increase car prices to combat the overwhelming demand.
Some Good News
Investors realized during the pandemic that an opportunity for new microchip manufacturing is apparent. Therefore, production of new factories in Texas, Taiwan, and China are currently in the works and should be able to start production within the next year. This means that supply will be able to catch up to demand around the beginning of 2023.
What Does This Mean for Your Members?
Your members will be spending more in every aspect of their daily lives. Cost of living is up, and it doesn’t seem to be slowing down anytime soon. This means your members may be tapping into those savings accounts to make up the difference. The last thing we want for your members is to decrease savings accounts after being stuck with a large out of pocket expense such as a car repair. Try to emphasize this concern with your members during their car buying process if it is applicable to their scenario.