Current New Vehicle Market

[gimmie11s]

It isn't the sole reason, but it is a significant factor. There will be a lot more chips used in cars in the future and it is already a significant cost in cars.

You shouldn't count on car prices being down once the chip shortage eases. All of the major OEMs have strong pricing power given the tight inventory. Before COVID started, Ford had around 75 days of inventory on dealership's lots but they will never do that again. Jim Farley already announced that: "We are really committed to going to an order-based system and keeping inventories at 50 to 60 days' supply.”
Ford is incentivizing customers to order their cars and not buy off the lot. Likewise, when dealerships order cars, they are guessing what their inventory mix should be. When customers order cars, there is no guessing. This reduces floorplan costs at the dealerships and empowers dealers to have a stronger bottom line. This is why prices won't go down and inventory will never be the same.

https://fordauthority.com/2021/07/ford-ceo-jim-farley-says-build-to-order-paradigm-is-companys-future/

You and others are assuming i/people in my camp disagree on manufactures intentions. We do not. I agree that is what Ford and others want to do.

Have you ever been on a publicly-traded company's quarterly earnings call? What they want/say they are going to do is often times VASTLY different than what they actually do. Why? Because of market conditions and general laws of supply/demand.

 

[gimmie11s]

Cool, not a huge difference in volume and my guess is if you had the inventory, you could have at least matched 2019. This could support the theory of huge incentives disappearing.

The story there, is his volume is down in an environment where there are MORE consumers with money, who want to consume.

That tells you all you need to know about where this is going once the macro supply chain corrects.

 

[13COBRA]

It sounds good on paper but remains to be proven by a long shot. Sounds like you have been drinking their cool-aid too long,

Sounds good on paper...looks good on paper. Ford stock is up 140% YTD. You can like it or not, doesn't matter to me. It makes since to the consumer, dealer and manufacturer. The only caveats to the rule are the people who need a car today and can't wait.

 

[13COBRA]

The story there, is his volume is down in an environment where there are MORE consumers with money, who want to consume.

That tells you all you need to know about where this is going once the macro supply chain corrects.

That's just one side of it though.

Manufacturing jobs idled for most of last year and some of this year. When you have MORE consumers, and LESS product it sets you up for this exact issue. It won't correct itself over night, it won't correct itself in the next couple of years.

 

[13COBRA]

Cool, not a huge difference in volume and my guess is if you had the inventory, you could have at least matched 2019. This could support the theory of huge incentives disappearing.

Matched? FAR exceeded.

 

[Rb0891]

No. Ford, along with other OEMs have also as recently as this year stated they need the dealer body. They plan on allowing each dealer to have a handful of vehicles on hand to show and to sell if the situation doesn't allow for a 4-6 month wait on a vehicle.

The mega dealers are up in arms because their massive inventory advantage is going away.

Wait. 4-6 months? Are you shitting me?

 

[VRYALT3R3D]

As soon as the multiple chip factories come on line, the car production issue will come to an end. The supply will be plentiful again. Yes, it is a supply issue. The auto production capacity is there as you can see from previous years. Cars require low end chips that china will more than able to supply.

"China (alone) has 14 new chip fabs under construction or about the break ground"

Not all chips are the same.

The automotive industry uses much older and less advanced chips, meaning the machines that are used to make them are obsolete and out of production. Even if they are able to get these machines, the chips themselves take around six months to produce. Soon these chips will be phased out in favour of silicon carbide chips.

Speaking of that, how many of the plants in your article are making silicon carbide chips? Those types of chips will be used in the next generation of vehicles. Are those factories producing chips for automotive or for different industries?

 

[cobracide]

Sounds good on paper...looks good on paper. Ford stock is up 140% YTD. You can like it or not, doesn't matter to me. It makes since to the consumer, dealer and manufacturer. The only caveats to the rule are the people who need a car today and can't wait.

You are good at moving the argument to different goal posts. Now it's the stock price? LoL.

 

[13COBRA]

Wait. 4-6 months? Are you shitting me?

Haha typo! 4-6 weeks, sorry.

Current wait time for a lot of vehicles are 4-6 months.

 

[13COBRA]

You are good at moving the argument to different goal posts. Now it's the stock price? LoL.

You're good at not arguing anything, and just trying to argue text in a sentence. Carry on.

 

[Rb0891]

Haha typo! 4-6 weeks, sorry.

Current wait time for a lot of vehicles are 4-6 months.

Ahh. That is much better and reasonable. I am on month 3 for one...

After this patch I think most will be accustomed to ordering and waiting a bit.

 

[13COBRA]

Ahh. That is much better and reasonable. I am on month 3 for one...

After this patch I think most will be accustomed to ordering and waiting a bit.

Thank God you didn't order a Bronco

 

[cobracide]

Not all chips are the same.

The automotive industry uses much older and less advanced chips, meaning the machines that are used to make them are obsolete and out of production. Even if they are able to get these machines, the chips themselves take around six months to produce. Soon these chips will be phased out in favour of silicon carbide chips.
Speaking of that, how many of the plants in your article are making silicon carbide chips? Those types of chips will be used in the next generation of vehicles. Are those factories producing chips for automotive or for different industries?

Did you see GM signed an exclusive contract with Global Foundries to fulfill their needs? I expect more of the same.

 

[gimmie11s]

That's just one side of it though.

Manufacturing jobs idled for most of last year and some of this year. When you have MORE consumers, and LESS product it sets you up for this exact issue. It won't correct itself over night, it won't correct itself in the next couple of years.

Agree on the premise, disagree on the timeline and wide-scale effects.

Another thing no one has touched on yet is the dollar and it's vulnerability as the world's currency. Unless there is a major shift in our economy things are T'd up to be VERY bad for us.

A correction is coming that will effect everything from housing and cars, to toothpicks and bandaids.

This is not a personal knock--But you are clouded by your "six figguh" view on things. The VAST majority of the country does not live like you, or most in this thread. You have to remember that the US household (all earners in the home combined) median income in 2020 was $67k. Think of the effects of current pricing on goods and what that means to those families. The current pricing environment is simply not sustainable without serious changes to infrastructure either directly or indirectly.

Ford and other consumer goods suppliers can "want" to do things a certain way to maintain/prop Co profits, but they do not and will not control the US economy at large.

 

[GTSpartan]

Sorry bro, but @13COBRA is correct that pricing will never return to what it was.

Despite messaging from OEMs that the chip shortage is starting to ease and it will be resolved by 2023, that will not be the case. The Original Equipment Suppliers Association recently had a conference and On Semiconductor, a major supplier, made it clear that the chip shortage is NOT going away in 2022 or 2023. The reason being is that BEVs use a lot of chips and connected & autonomous vehicles use significantly more. Although chip makers are increasing capacity, it will not satisfy the demand for chips for automotive. With many new BEV and connected vehicles coming out in the next couple of years, all that additional capacity will be wiped away. As such, tight inventory will remain in place and car prices will continue to rise.

That all assumes that market conditions don't change.

 

[cobracide]

You're good at not arguing anything, and just trying to argue text in a sentence. Carry on.

Your arguments are so nebulous there is no point as you keep changing the focus. New to used car sales to stock price. Follow through on one point if you can. Yeah ok. Keep dodging.

 

[13COBRA]

Your arguments are so nebulous there is no point as you keep changing the focus. New to used car sales to stock price. Yeah ok.

If used car prices drop substantially, and open up the gap between new and used prices...what happens with new car prices? They go down.

If used car prices increase substantially (like they have) and closes the gap between new and used prices...what happens with new car prices? They go up.

When Ford Motor Company announces they're going to a build to order system and reducing dealer inventory, and the stock dramatically increases, is that because futures analysts think that it won't work, or will work? Will work.

 

[q6543]

I can see how this disruption lasts all the way into electrification and beyond.

 

[cobracide]

If used car prices drop substantially, and open up the gap between new and used prices...what happens with new car prices? They go down.

If used car prices increase substantially (like they have) and closes the gap between new and used prices...what happens with new car prices? They go up.

When Ford Motor Company announces they're going to a build to order system and reducing dealer inventory, and the stock dramatically increases, is that because futures analysts think that it won't work, or will work? Will work.

There is more than your "build to order" thesis in play for Ford stock outlook. Get the big picure - there is also the ford EV goal announcement, shortage which increases profit margin, market forces and extraneous other factors. Ford Stock price in no way correlates 1:1 to your one off "just in time" scenario. It's just wishful thinking.

 

[13COBRA]

There are more than your "build to order" thesis in play for Ford stock outlook. Get the big picure - there is also the ford EV goal announcement, market forces and extraneous other factors. Ford Stock price in no way correlates 1:1 to your one off "just in time" scenario. It's just wishful thinking.

I'm not saying that's the ONLY thing driving the stock. That's one of them.

Go ahead, dispute the first two points with facts. I'll wait.