Connect with us
microchip-generic

Features

Chips ahoy: What the microchip shortage means for the transmission industry

Advertisement

A shortage of microchips and other automotive parts is creating a scarcity of new cars on dealership lots. Inventories of new cars to buy or lease are very constricted and aren’t likely to be back to normal for several months.

Click Here to Read More
Advertisement

Jean-Marc Chery, CEO of chip manufacturing company STMicroelectronics, says the effects of the shortages are likely to linger until early 2023. While the chip and parts shortage has created an undersupply of new cars, it has, in turn, led to what CNN is calling a “scorching hot used car market,” with prices of used cars rising 10.5% in June; 45.2% in the last twelve months. The average age of vehicles is older as well, now 12.1 years—the first time that average has exceeded 12 years.

According to analytics and research company IHS Markit, new vehicles are predicted to make up about 5% of cars on the road, a decrease from last year’s 6.1% figure. Repair shops will benefit as many are deciding to purchase their leased vehicles, taking them off their warranties.

Advertisement

Older cars on the road lead to more transmission work for our industry in the long run. We know that the more miles there are on a car, the more likely the transmission is to break down. Used cars in need of repair get those repairs before being resold, unlike new cars returning to the dealership under warranty. The increase in used car sales will continue to heighten the need for updated transmission kits and parts to raise used car value and keep them running longer and more efficiently. Inadvertently, the chip shortage has helped the transmission aftermarket flourish, providing it more opportunities to sell transmission repairs as more people hold onto their older cars.

Advertisement

Cassidy Sollazzo works with social media for Precision International and is a graduate of UCLA. She is the daughter of Precision International Sales VP John Sollazzo.

Advertisement

POPULAR POSTS

Features

Transmission stories to be thankful for

Connect
Transmission Digest