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Automakers are in a pickle: delay production of cars because of a lack of chips, or produce cars, trucks, and SUVs missing some features customers have come to expect? It’s fascinating to see how different automakers are handling this once in a lifetime supply chain conundrum!
Ford, for example, just announced that they will ship and sell vehicles without chips controlling non-safety critical features. Yes, you read that right. It’s 2022, and Ford is getting even more desperate for semiconductors. It’s doubtful that there are any optimists left with regards to the auto industry supply shortage.
Ford isn’t the only manufacturer that is struggling to produce vehicles with all of their standard equipment. Let’s break down who is doing what, and which features consumers should and shouldn’t expect in their new car.
Ford to deliver thousands of vehicles without non-safety critical features
In March 2022, Ford told dealers that the chip shortage is getting worse, and that they’re going to need dealer’s help to sort things out. Automotive News reports that Ford executives told dealers that the automaker will have to enact a worst-case scenario plan that was floated last summer. Ford’s plan is to ship new vehicles to dealers without many of the semiconductor chips that are essential for features like auto stop-start, heated seats, and certain infotainment functions.
Ford spokesman Said Deep told Automotive News Ford would build Explorers without rear seat heat controls that could be added later. Ford already offers customers the option to order F-150s without the auto stop-start feature. Deep told Automotive News that in the case of the Explorers, buyers will receive a price reduction for the change, and Ford will restore rear seat passenger control of heating and air conditioning for free at a later date.
On the hunt for the elusive Ford Bronco? Thousands were recently seen waiting for parts outside of a production plant in Michigan. Patience and compromise will go a long way for car shoppers in 2022.
GM removes many features
General Motors has seemingly been hit the hardest by the ongoing chip shortage. While the company tries to move forward, many core features and functionalities have been removed from their lineup.
GM removed heated and ventilated seats and heated steering wheels
General Motors made headlines late on Friday, November 12th when they announced that beginning on Monday, November 15th they would stop production of most of their vehicles with heated and ventilated seats, as well as heated steering wheels.
The effected vehicles include:
Chevrolet Colorado
Chevrolet Blazer
Chevrolet Equinox
GMC Canyon
GMC Terrain
All Chevy Silverados and Traverses except High Country trims
All GMC Sierras and Acadias except Denalis
General Motors has not signaled when the vehicles would be produced with their previously expected equipment. GM has said that effected customers will be eligible for a $150 to $500 credit.
Earlier this year, GM removed climate control digital temperature displays, side blind zone alert and Super Cruise driver-assist technology on certain 2022 vehicles. Fortunately, now those features are available.
Update 11/22/21
On Friday November 19th, in a memo to their dealers, GM announced that they will reduce the credit given to customers who do not receive vehicles with heated seats. Instead of a credit up to $500, GM will credit customers up to $50. Correct, $50 for losing heated seats in their car. That’s crazy.
GM also instructed dealers that they think they will be able to retrofit vehicles with heated and ventilated seats by mid-2022. GM told dealers that heated steering wheels cannot be retrofitted, so vehicles missing that feature will still be discounted by $150.
Chevrolet and GMC lose HD Radio and wireless charging
Earlier in 2021, GM said it would eliminate the HD radio option because of a lack of semiconductors. Both 2021 Chevrolet Silverado 1500s and GMC Sierra 1500s, as well as 2022 model year 2500 and 3500 heavy-duty pickups were impacted. All trim levels were affected, and GM is offering buyers of a $50 credit.
Also earlier this year, GM announced that wireless charging pads would not make it into many of its vehicles. The 2021 Chevy Tahoe, Suburban, and GMC Yukon SUVs as well as the 2022 Buick Enclave, Chevy Traverse, and Cadillac XT5 and XT6 were all impacted by this decision.
Vehicles for sale without the charging pad will get a $75 credit.
GM removes auto stop-start and V-8 cylinder deactivation
Two core features that help make GM trucks more fuel efficient have gone missing: auto stop-start, and cylinder deactivation. In June, GM said the 2021 Silverado 1500 and the GMC Sierra 1500 would not come with stop-start technology. Customers who miss out on this feature are entitled to another $50 credit.
Even earlier this year, GM announced that some 2021 Chevy Silverado and GMC Sierra models would use more gas because they would not have their cylinder-deactivation systems. The impact? The trucks would increase their fuel usage by one mile per gallon.
BMW removes touchscreens from their cars
A brand new BMW X7 SUV has an MSRP of upwards of $100,000. At that price, you’d expect to get any feature or option you could possibly imagine. Buy a new car in 2021 and you’ll notice a piece of equipment nearly as ubiquitous as the seatbelt, however in your new $100,000 X7 you won’t have it; a touchscreen.
The effected vehicles include:
3-series
4-series coupe and convertible
4-series Gran Coupe (excluding i4)
Z4
All variants of the X5, X6, and X7
BMWs that were also ordered with the Parking Assistant package will now lose BMW’s Backup Assistant technology.
Porsche removes adjustable seat and electric steering column adjustment
Earlier this Spring, Porsche told its U.S. dealers that their 18-way adjustable seat option (part of a $2,090 upgrade) would not be available. It appears that today the option is back for the Macan.
Another feature temporarily missing from some new Porsches is the electric steering column adjustment. Earlier this month, Porsche spokesperson Christian Weiss said that Porsche has been in communication with customers who have ordered cars with this feature, and said it will deliver vehicles with a manual steering column adjustment for the time being. Once available, the electric version will be retrofitted.
Tesla removes USB ports and passenger-seat lumbar support
Even thought hey have raised their MSRP by 20%+ in 2021, Tesla has not been immune from chip shortage challenges. Earlier this year in May, Tesla removed lumbar support from the front passenger seat in the Model 3 and Model Y EVs.
Recently, another feature was silently deleted, USB-C ports in the rear of the center console of the Model 3 and Model Y.
How will this affect used car prices?
Used car prices have ben skyrocketing for the past year. With new car production unable to keep up with demand, we have seen wholesale and retail used car prices set all-time highs. Frequently we are seeing used cars sell for more than their original MSRP.
Interestingly, with new vehicles being sold without all of their standard features, we wouldn’t be surprised if there is even more upward pressure on newer model year used vehicles. Would a consumer pay a premium for a used 2020 or 2021 that has all of the functionality they’ve come to expect, or wait for a factory order that may or may not have the features they expect? We think consumer demand for new user vehicles will continue to drive used car prices up.
If you’re looking to buy a new car anytime soon, you’re in for a rude awakening … Finding a new car for sale right now in the United States is borderline impossible. Typically, manufacturers stock their dealers with a nearly 100 day supply of inventory. Right now, the industry is running at an 18 days supply. That being said, the total number of new cars in inventory ticked up 1.3% this month as compared to last.
Each month we capture new data on industry-wide new car inventory levels. We have compiled the most up-to-date information here for you. Click below to jump to a particular manufacturer. Please note that we are not able to get vehicle specific inventory data for many of the manufacturers. This is something we hope to be able to provide in the near future.
Based on days supply, here are the cars, trucks, and SUVs with the lease inventory right now:
Inventory Units (November)
Inventory Units (October)
Inventory Change
Days Supply on Nov 1
Days Supply on Oct 1
Days Supply Change
Subaru trk
4,500
6,400
-1,900
4
5
-1
Subaru car
1,500
1,700
-200
5
6
-1
Insight
700
1,100
-400
9
14
-5
Hyundai car
6,200
11,700
-5,500
9
15
-6
Kia car
8,000
13,000
-5,000
9
13
-4
CR-V
9,200
14,800
-5,600
10
21
-11
Hyundai trk
13,700
15,000
-1,300
10
11
-1
Mazda car
1,500
2,300
-800
10
13
-3
Mazda trk
6,000
10,100
-4,100
10
13
-3
XC40
800
1,500
-700
10
18
-8
Based on the total number of available units, here are the cars with the least inventory:
Inventory Units (November)
Inventory Units (October)
Inventory Change
Days Supply on Nov 1
Days Supply on Oct 1
Days Supply Change
Fusion
100
100
0
82
60
22
Clarity
100
200
-100
35
49
-14
90 series
100
100
0
42
34
8
ILX
400
100
300
46
5
41
Insight
700
1,100
-400
9
14
-5
XC40
800
1,500
-700
10
18
-8
Navigator
1,300
1,400
-100
29
29
0
Odyssey
1,300
2,400
-1,100
13
11
2
TLX
1,400
2,000
-600
27
26
1
Mazda car
1,500
2,300
-800
10
13
-3
These are the vehicles with the lowest days supply of inventory right now. Don’t expect to get a “deal” on any of these vehicles, because the dealership knows they have very little inventory.
Toyota Tundra prices are going up, up, up. Each model year automakers increase their base MSRP, however this year the percentage increase is especially impressive. Amidst the ongoing chip shortage, and quarterly earnings that show significant declines in manufacturer profits, we aren’t too surprised to see automakers drastically increase their prices year-over-year. Toyota Tundra prices are a bit surprising though. With their redesign for the 2022 model year, Toyota has drastically increased their MSRP prices for the 2022 Toyota Tundra.
Let’s breakdown the new pricing from Toyota for 2022.
2022 Toyota Tundra Prices
New for 2022, Toyota has finally redesigned the Tundra. Exciting! What’s not so exciting is the year-over-year increase in MSRP for the truck.
Trim
2021
2022
Percent Change
Tundra SR (RWD/Double Cab/6.5-ft bed)
$34,125
$37,645
10.32%
Tundra SR (4WD/CrewMax/5.5-ft bed)
$37,705
$42,695
13.23%
Tundra SR5 (RWD/Double Cab/6.5-ft bed)
$36,145
$42,450
17.44%
Tundra SR5 (4WD/CrewMax/6.5-ft bed)
$41,470
$48,810
17.70%
Tundra Limited (RWD/CrewMax/5.5-ft bed)
$44,705
$50,595
13.18%
Tundra Limited (4WD/CrewMax/6.5-ft bed)
$45,890
$53,925
17.51%
Tundra Platinum (RWD/CrewMax/5.5-ft bed)
$49,345
$58,685
18.93%
Tundra Platinum (4WD/CrewMax/6.5-ft bed)
$52,395
$62,015
18.36%
Tundra 1794 Edition (RWD/CrewMax/5.5-ft bed)
$49,345
$59,385
20.35%
Tundra 1794 Edition (4WD/CrewMax/6.5-ft bed)
$52,395
$62,715
19.70%
On average the 2022 Tundra will cost 15% more than the prior model year. This is a HUGE increase year-over-year.
If you could wave a magic wand and imagine what a “perfect storm” scenario would look like to drastically reduce automakers production capabilities, you’d probably describe something like what we’ve seen in 2021. Whether it’s supply chain constrains, virus outbreaks, or workers who are simply quitting, automakers are facing a series of setbacks that are unprecedented in scope and scale.
This “perfect storm” has had meaningful and material impacts on the everyday consumer. Everything is more expensive. Not just cars, trucks, and SUVs (did we mention that wholesale used car prices have increased 40%+ in 2021 alone?), but in other categories such as household goods, food, and more. We’re in the perfect storm, and for better or worse, that’s going to have major impacts on our pocketbooks next year, in 2022.
How big will the impact be in 2022? What changes do we expect automakers to make heading into the new year? And most importantly, when will things “go back to normal” (or will they?)? We’ll answer these questions and more. Let’s dive in.
What got us here
Automakers, like all major manufacturers, operate on just-in-time (JIT) manufacturing practices. Just-in-time manufacturing is a business operating model where finished goods are created to meet demand. That’s it. Plain and simple. Finished goods are not created in surplus or in advance of any need. The benefit of JIT production is that the manufacturer can (in theory) avoid the waste associated with overproduction, the carrying costs of holding and storing inventory, and the burden of housing input materials that are necessary to create the finished good.
Henry Ford, in his 1923 book, My Life and Work describes just-in-time manufacturing:
We have found in buying materials that it is not worthwhile to buy for other than immediate needs. We buy only enough to fit into the plan of production, taking into consideration the state of transportation at the time. If transportation were perfect and an even flow of materials could be assured, it would not be necessary to carry any stock whatsoever. The carloads of raw materials would arrive on schedule and in the planned order and amounts, and go from the railway cars into production. That would save a great deal of money, for it would give a very rapid turnover and thus decrease the amount of money tied up in materials.
For all the benefits that JIT brings, it also has some downsides; mainly, when one piece of the intricate global system that delivers input goods to manufacturing plants on-time goes down, the whole system can be effected. What does this mean? It means that if one component of a vehicle doesn’t make it just in time to a production facility, then the whole process can come to a standstill.
That’s exactly what happened towards the end of 2020 when automakers slashed their orders of many input components. With the uncertainty of what was going to happen as a result of the coronavirus pandemic, automakers did not want to hold onto excess inputs at their production facilities (remember, JIT requires you to only have what you need). What no automakers expected was for new vehicle demand to stay steady in 2021. The expectation was that consumer demand would decrease because of the pandemic, that never panned out.
For months major original equipment manufacturers (OEMs) struggled to get their hands on the materials they needed to produce vehicles. The component that became the most challenging to source was (and still is) integrated circuits (also called semiconductors, or chips). These circuits are everywhere in our cars. From turning on the air conditioning to changing your turn signal, ICs play a major role in how your vehicle operates.
We’ve documented the chip shortage at great length. Suffice it to say the auto industry’s commitment to JIT manufacturing has completely backfired. With demand for semiconductors through the roof, price gauging has become rampant. It’s a classic case of the golden rule: she who has the gold, rules. Whomever has the chips right now, they rule.
In addition to input costs rising, OEMs have been faced with other pandemic induced challenges. Manufacturing plant shutdowns because of the virus have been rampant in 2021.
Automakers have collectively lost over 3,000 production days in assembly plants so far in 2021. That data comes from Bill Rinna, LMC Automotive’s director of vehicle forecasts for the Americas.
The impacts we’ve seen so far
Used cars typically depreciate. Actually, let me rephrase that. Used cars depreciate. Never in history have we seen used vehicles appreciate in value like we are seeing so far in 2021.
Did you buy a brand new Toyota Camry three years ago and put a couple thousand miles on it? Guess what, you can sell it back to the dealer right now for likely exactly what you paid for it back then (or potentially more!). Seriously.
Because automakers have not been able to produce new vehicles at levels they expected to, used car prices have gone through the roof. New car prices have too. If a car does make it to a dealers lot, it is being sold with additional dealer markup (ADM) and all sorts of “accessories” or “add-ons” to boost dealer profit.
The days of buying a car, truck, or SUV at invoice price are long gone. And the premise of buying a used car that has depreciated a bit, because it represents a “better deal” is entirely dead. In a market where new cars sell for significantly over MSRP, and used cars sell for more than their original MSRP, us consumers are at a loss. If you’ve tried to search for a car recently and said to yourself, “WTF!!!” you are not alone.
From the thousands of CarEdge members we help each month, we’ve seen most new car deals include at least $1,500 in additional “stuff”. This “stuff” can come in the form of dealer markup (market adjustments, additional dealer markup, etc.), accessories (appearance packages, protection packages, etc.), or general add-ons (window tint, nitrogen in the tires, etc.). If you’re able to buy a new car at MSRP without this additional markup/fees, that represents an incredible value right now.
The impacts we’ll see next year
MSRP stands for “manufacturers suggested retail price”. Over the past few months we’ve seen first-hand how important the word “suggested” is. Dealers have marked up their vehicles well above MSRP, and consumers are paying. With such limited supply, dealers are able to make ridiculous amounts of profit. Every publicly traded auto dealer made record profit in Q3 of 2021 as a result of this.
Next year we don’t think dealers will be able to make quite as much money. Why? Because the OEMs are going to get in on the fun — they’re going to drastically increase the MSRP. This won’t inherently stop car dealers from marking up even further past the MSRP, however we expect and anticipate very significant increases in MSRP for all new vehicles for the next model year.
We’ve already begun to see this. Tesla recently increased the price of its model S and Y by $2,000, followed by a $5,000 hike on for the model X and S.
Other automakers are already doing the same thing. The MSRP on a base Ram 2500 has increased 5% from 2021 to 2022 for example. We expect, and wouldn’t be surprised if more automakers increase their MSRP by double-digits in 2022.
The impacts we’ll see forever
Many of the major automakers have already signaled that they like their dealers having less inventory. The United States is the only major market where car dealerships have massive lots full of inventory. In many markets the dealership is simply a showroom with customers placing orders for the vehicles they want.
As more and more manufactures aspire to provide a “Tesla” like experience, we would not be surprised to see less inventory on dealer’s lots, and more factory orders.
Factory orders will also become more of the norm. Consumers may go to a dealership to test drive and “experience” a new car, but instead of buying it right there on the spot, they’ll place an order. This is a common practice in Europe and other major markets, however in the US it has never caught on. That’s likely going to change.
Used car prices typically follow seasonal patterns. Winter, and the fourth quarter are traditionally when the used car market experiences most of its yearly depreciation. So far, in this fourth quarter of 2021 used car prices have appreciated 5%.
We all know that used car prices have been increasing this year, and the latest data from Black Book suggests we’re going to continue to see used car values appreciate through the end of this year. That being said, we are starting to see some mixed signals from other data providers. Cox Automotive recently shared data that used car inventory levels have increased in November. Although used car prices have continued to increase, we could potentially be seeing a softening in the market if inventory levels continue to rise.
In this post we’ll run through the latest data on used vehicle values. We will update this page weekly as we get new data and information to share. If you have specific questions about used car prices please ask them on the CarEdge Community Forum.
Wholesale used car prices have continued to increase. Data from Black Book shows that wholesale used vehicle prices have appreciated 48% in 2021 alone. The purple line represents 2021 wholesale weekly price changes. The blue line represents 2019 (the last “normal” year) of data we have. You can see drastic differences between the two lines.
As wholesale prices have continued their ascent, retail used car prices have followed suit. Retail used car prices are up more than 33% since the beginning of this year. Again, look at the purple (this year) and blue (2019) lines in the graph below. It’s incredible to see the stark difference between the two.
That being said, wholesale used car inventory levels have ticked up so far in November. Data from Cox Automotive showed positive signs in terms of inventory with October inventory levels up 200,000 units from September. September ended with 2.28 million used vehicles in inventory, while October ended with 2.30 million. October’s supply was still about 8% lower than 2020.
Cox also estimates the days supply of used car inventory. It is at 42 for the month of October, the same as September. Their data suggests that about 1.65 million used vehicles were sold in October 2021, up 400,000 units from the 1.61 million sold in September. October sales ran about 7% below the same year-ago period.
Both Cox and Black Book show retail used car prices hitting all-time highs. Cox has the average listing price for used vehicles at a new record of $26,971. That’s a $400 increase from September ($26,548).
One of the most interesting data points Black Book tracks is used vehicle retail listings volume. This means how many used vehicles are listed for sale in the United States each week. Data from Cox suggests inventory levels are edging higher, and Black Books data shows the same thing. We see a slight week-over-week increase in retail listing volume.
Again, the purple line represents this year, and the blue line shows 2019. Typically we would see an increase in retail listing volume at this time of year, however right now the volume is still low and not increasing. This simply means there are less used vehicles for sale than earlier in the year, and the lowest level we’ve seen so far this year.
That being said, we did see another week of wholesale price increases, our 13th straight week of appreciation. Last week cars appreciated .70%. This week that sunk down to .13%. Trucks and SUVs increased .61% last week, and increased modestly by .21% this week. The used car market as a whole was up .18%, considerably lower than last week.
This shows last weeks wholesale used car, truck, and SUV price gains.
Toyota’s new car sales volume was down 29% in October. Toyota’s biggest sellers posted double digit declines in sales volume in October: Camry down 40 percent; RAV4 down 39 percent; Tacoma sales declined 38 percent; Highlander off 19 percent and Corolla sales off a staggering 61 percent.
It wasn’t just Toyota. Honda sales volume dropped 24% in the month too.
Used car prices will continue to appreciate as long as automakers are struggling to produce enough new vehicles. These recent earnings reports highlight how much the major manufacturers are struggling to stock their dealer’s lots.
What types of cars are increasing in value the most?
Black Book supplies us with compelling data on the change in used car prices broken down by segment of vehicle. This past week compact cars appreciated in value the most. These are your Subaru Imprezas, Ford Fiestas, Nissan Versas, Mazda Mazda3s, Ford Focus, etc.
Sporty cars are finally depreciating! This time of year is seasonally when sports cars depreciate the most.
Compact vans and full-size vans continue to increase in value rapidly. Their value increased well over 1% week-over-week. Full-size vans have increased in price 42 out of the past 43 weeks.
Black Book provides “sales rate” data from the wholesale used car auctions.
Directly from Black Book:
The weekly estimated average sales rate has remained stable at the 70% mark for the 2nd week in a row. This time last year, the estimated average weekly sales rate was around 51%, so while floor prices continue to rise, buyers continue to purchase vehicles at auction at a higher rate.
Typically the holiday season signals an increase in newer used vehicles. This is because of lease returns and rental vehicles coming to the auction. This year that is not happening to previously expected levels. While there was a slight uptick in newer model year vehicles rolling across the lane this past week, a significant portion of vehicles are arriving damaged.
Franchise car dealers are grounding lease returns and not sending them to auction. Fierce competition at the auctions can be mostly attributed to large independent dealerships and rental companies. Because of inventory scarcity, we have seen bidding wars across the country. Wholesale values and floors continue to increase and give no indication of slowing down.
We’ve heard stories from our community of similar experiences at the auction, and it appears that rougher and rougher vehicles are crossing the auction block at this time.
Are any used cars depreciating?
No. From all of the data we’ve been able to get our hands on, it looks like there isn’t a single style of vehicle or particular nameplate that is not increasing in value right now. We know that certain vehicles are appreciating less than others, however all vehicles are increasing in value right now.
Luxury vehicles, and in particular luxury SUVs are appreciating much less rapidly than other vehicles. Take for example the Mercedes-Benz GLC, it has only appreciated 8% year over year. This further reinforces the theory for why the Mirage has increased in value nearly 50%; consumers need affordable and attainable used cars, not expensive and luxurious ones.
How long will used car prices keep going up?
Although our crystal ball has been notoriously cloudy here at CarEdge, we feel confident in saying that used car prices will continue to increase well into 2022. Even when automakers get production back up to speed for new vehicles, there will be lingering effects from this period of time where they have not been able to produce at expected capacity.
Also, the price to produce new vehicles has gone up. As a result of the chip shortage (and other supply chain issues), we expect MSRP on new vehicles to be considerably higher than before. Why? Because the manufacturers costs are increasing, and they will likely pass that along to the consumer. As a result, the demand for used cars will continue to be high because used cars (especially vehicles like the Mitsubishi Mirage) will be the only “attainable” price point vehicles for many people.
For these reasons, we think week over week, and month over month used car price increases will continue for at least another 12 months.
When should I sell my used car?
If used car prices are likely going to continue to appreciate, it would make sense to hold onto your used vehicle and wait to sell it. That being said, our best recommendation is to track the value of your used vehicle weekly. To do this we encourage you to use the “value my vehicle” section of your CarEdge account. You should also get quotes from Carvana, Vroom, CarMax, etc.
There may be small fluctuations in price from week to week, but we expect the price of your vehicle to gradually increase overtime. The indicator for when to sell will be when you see week over week declines in the value of your vehicle.
If You’re Buying a Used Car …
Our recommendation has been, and will continue to be to stop buying cars! We’re so passionate about this that we even made a website: http://stopbuyingcars.com/
However, if you need to buy a used car right now, here’s what you need to remember.
How to value if it’s a fair deal
The only way to know if you’re getting a fair deal is to get the out-the-door price from the seller and then compare that to the vehicle’s value. To get the out-the-door price follow this guide:
To know if the vehicle’s price is fair, we encourage you to run the VIN through the CarEdge vehicle valuation page and to also get a quote from Carvana to see what they would pay to buy the car right now. If the Carvana quote is close to what you are paying for the vehicle, then it’s likely a pretty fair deal.
Get a pre-purchase inspection
In today’s market, with “rougher” used cars for sale it is critically important that you get a pre-purchase inspection done on the vehicle you are thinking of purchasing. We have heard too many horror stories of people buying used cars “as-is” and then getting stuck with a piece of junk. Avoid that, and get a PPI!
Consider an extended warranty from CarEdge
Last but not least, consider getting an extended warranty on your used vehicle. CarEdge partnered with AUL Corporation to sell extended warranties with a flat markup, transparent pricing, and free consultations with an Auto Advocate. If we can help you protect your use car, we want to. More on that here: https://caredge.com/extended-warranty/ and request a free quote here: https://app.CarEdgemember.com/service-contract
CarEdge Insights
