[Roosterman]

I went to my local dealer a bit ago and inquired when they figured they would see the SC. The sales guy said probably starting in mid-September, which has proved to be true. When I said was the slowness of rollout due to the "chip shortage" his response was not so much. While that has had an effect he said right now the biggest problem was with delivery. There seems to be a shortage of truck drivers also.

Now back to the "chip shortage" issue. A few days ago, I ran it to this article, The global chip shortage: What caused it, how long will it last?. Between it and another article I can't remember, I gleaned part of the auto manufacturers problem was short-sightedness. When the pandemic hit, they canceled their orders. The chip makers then found other industries that weren't as dramatically affected by the pandemic to pick up the slack. Since the world economy is beginning to recover automakers are ordering chips again, but the makers don't have the capacity nor desire to create more capacity since the autos use legacy chips and haven't kept up with chip advances. So the chips will ramp up when the makers get around to it. (These are my words, not direct quotes.)

To get ramped up to change to newer style chips is expensive and long-term. Automakers are hesitant since they know how well their current chip design work and new types will be expensive and time-consuming to test them out and bring them online in vehicles.

 

[_metafizik]

I went to my local dealer a bit ago and inquired when they figured they would see the SC. The sales guy said probably starting in mid-September, which has proved to be true. When I said was the slowness of rollout due to the "chip shortage" his response was not so much. While that has had an effect he said right now the biggest problem was with delivery. There seems to be a shortage of truck drivers also.

Now back to the "chip shortage" issue. A few days ago, I ran it to this article, The global chip shortage: What caused it, how long will it last?. Between it and another article I can't remember, I gleaned part of the auto manufacturers problem was short-sightedness. When the pandemic hit, they canceled their orders. The chip makers then found other industries that weren't as dramatically affected by the pandemic to pick up the slack. Since the world economy is beginning to recover automakers are ordering chips again, but the makers don't have the capacity nor desire to create more capacity since the autos use legacy chips and haven't kept up with chip advances. So the chips will ramp up when the makers get around to it. (These are my words, not direct quotes.)

To get ramped up to change to newer style chips is expensive and long-term. Automakers are hesitant since they know how well their current chip design work and new types will be expensive and time-consuming to test them out and bring them online in vehicles.

The chip shortage is a major part of the problem and it's hitting the auto makers especially hard because the chips they use are using very old chip fab processes. It costs the chip makers more to ramp up the old fab equipment and they're not all that keen to do that. They're trying to get the auto makers to get with the times and move to newer chip technology. We'll see how it goes...

 

[JMII]

Chips, drivers, toilet paper, importers, customs delays at ports of entry... the whole supply chain is a mess. I work for a large, international manufacture of printing equipment and we are struggling to get unit into the US, especially by sea. We have resorted to air freight but even that is challenging due lack of drivers, riggers, warehouse workers, etc. Just last week we had a supplier shipment get bumped off a flight for medical supplies which are more critical.

As stated in the article due to work from home chip allocation went into business equipment and since many were not driving to work auto makers cut back on orders. Now they have to get back in line. Ford has thousands of vehicles just sitting waiting for chips. The C8 has suffered massively with plant shutdowns, parts delays and work stoppages. GM could only make about 1/2 what they originally planned for. Chevy and Nissan removed some features from their vehicles to try to keep up.

The SC launched into a difficult situation so us consumers are just hosed until the situation gets resolved. The real questions is are we 6 or 12 months away from things returning to normal, or is this our new normal?

 

[HSC4ME]

I get the impression that Hyundai is intentionally rolling out the SC in drips and drabs. They don't want the lots filled with SC's that they have to discount to unload. A new car is an expensive item to purchase and the economy is very sketchy. Just my $0.02 on it.

The crazy thing in my eyes is that some think they can get crazy $1,000 to $21,000 above MSRP for them without losing customers to other brands. I think that is a huge mistake on their part.

Is demand really as strong as they claim? I think not. My brother was working with a dealer on a coming SC. The dealer stopped communicating at $600 over MSRP. My brother is firm at never going over MSRP, period. The dealer insisted it will be sold before it even arrives if he doesn't step up right now and pay the piper! He simply told them when you are ready to sell it at MSRP give me a call.

Today we noticed that SC has already arrived and is sitting on their lot unsold... Where is this mythical buy at any price demand? Or even the buy at any markup at all demand?

 

[Portentous2]

From what I have read, the inventory is short and the automakers and the dealers like it that way. Automaker profits are steady or up and dealer profits from 2019-2020 rose 48 percent with 2021 looking like another great year for them. This article has some good information: Automakers Carrying tight Inventories.

Although not as crazy as it is now, smaller inventories might be had going forward. The consumers need to make sure they are paying fair prices. For the limited model I am looking at, I have only found one on the lot in my state and the dealer wants 5k over msrp. It has been sitting there for over a month and I hope it continues to sit there.

 

[Bensonr2]

From what I have read, the inventory is short and the automakers and the dealers like it that way. Automaker profits are steady or up and dealer profits from 2019-2020 rose 48 percent with 2021 looking like another great year for them. This article has some good information: Automakers Carrying tight Inventories.

Although not as crazy as it is now, smaller inventories might be had going forward. The consumers need to make sure they are paying fair prices. For the limited model I am looking at, I have only found one on the lot in my state and the dealer wants 5k over msrp. It has been sitting there for over a month and I hope it continues to sit there.

I'm not so sure about that. I saw other articles that indicated some of the major manufactures are shipping a fraction of the vehicles they normally do and as such revenue is down this year. Dealers maybe a different story, they may see themselves making the same money selling less cars and think they can carry those margins on after the supply chain returns to normal.

 

[dartgt64]

I heard they were projecting sales of about 30K 2022 SCs based on reservations. The plant is also making the 2022 Tuscon, but I don't know if it is on the same line. The plant in AL is capable of nearly 400,000 vehicles a year, but also builds the Sonata, Elantra and the Santa Fe.

Interestingly, Ford is planning to move to a Tesla model...no dealers...100% special ordered. Now that is a real paradigm shift for the industry.

Ford Moving toward Build-to-Order, Away from Packed Dealer Lots

'I know we're wasting money on incentives,' says CEO Jim Farley, acknowledging the way people buy cars and trucks is changing.

www.caranddriver.com

I think the last days of personal ownership are upon us and will arrive as soon as they get self driving cars figured out. Who will care what their robot Uber vehicle looks like? Owner cars will be an anachronism with them limited to track use.

 

[Bensonr2]

I think the last days of personal ownership are upon us and will arrive as soon as they get self driving cars figured out. Who will care what their robot Uber vehicle looks like? Owner cars will be an anachronism with them limited to track use.

Respectfully disagree. I think we are 40-50 years away from true self driving cars, and that's assuming some breakthroughs in technology that may or may not come. I think people get a false sense because they see projects like Google's self driving car and think its simply a matter of ironing out the kinks and scaling up.

Do you know that Google and similar self driving cars pre map every road the car drives on? And that's not like your Google or Apple maps. It's pre mapped in detailed 3D. To me that seems like it will likely never be feasible at scale. By the time they finished creating a nationwide map for a self driving system the map data would be too far out of date and they would need to start over.

They need to devise a system where upon the 3D mapping eyes of a computer via LIDAR and other camera systems can identify objects with the same ability as humans. And they are a long way away from that.

 

[Sbleezy]

I think the last days of personal ownership are upon us and will arrive as soon as they get self driving cars figured out. Who will care what their robot Uber vehicle looks like? Owner cars will be an anachronism with them limited to track use.

It won't come as soon as you think. As a software engineer I in no way shape or form would get in a autonomous car. You should see the bugs we have on the simple programs we have now. You trust someone else's software to keep you safe? I wouldn't....

Now in no way shape or form am I bashing software / hardware that helps keep us safe. But software does fail... And more frequent then you would like to think

That being said they can't even keep the cars on the road 10 years from now with all the new technology in cars. Bugs / recalls are the new norm and it's quite sad.

You buy a high end computer, how long does it last? 5 years if you're lucky. The cars are made to be replaced in 5-10 years because of outdated hardware and bugs.

I may bite my words but when people start dying by things out of their control, there will be issues. At least I choose my fate now.

 

[JMII]

I saw other articles that indicated some of the major manufactures are shipping a fraction of the vehicles they normally do and as such revenue is down this year. Dealers maybe a different story, they may see themselves making the same money selling less cars and think they can carry those margins on after the supply chain returns to normal.

Correct. The OEMs profit on numbers or volume, but dealers generate profit on individual units. Remember Hyundai (or any other OEM) doesn't see a dime of these outrageous over MSRP mark ups or stupid dealer add ons like nitrogen filled tires. That extra coin goes into the dealers pocket in addition to their automatic hold back.

 

[JASmith]

Correct. The OEMs profit on numbers or volume, but dealers generate profit on individual units. Remember Hyundai (or any other OEM) doesn't see a dime of these outrageous over MSRP mark ups or stupid dealer add ons like nitrogen filled tires. That extra coin goes into the dealers pocket in addition to their automatic hold back.

Manf's profit from this market in that they have no need for incentives though. Dodge/Ram for example would often have outrageously huge manufacturer rebates which we got on our last two FCA product purchases, but there's nothing now as far as I can tell except for offering low finance.

 

[Bensonr2]

I thought it was funny one dealer who tried to sell me on paying an over 6k premium on an already pricey limited sent me an example invoice.

Their invoice line items included a line below msrp for discount which seemed to be the only line they had to place the price premium. So the "discount" was a negative 6k plus.

 

[Bensonr2]

Manf's profit from this market in that they have no need for incentives though. Dodge/Ram for example would often have outrageously huge manufacturer rebates which we got on our last two FCA product purchases, but there's nothing now as far as I can tell except for offering low finance.

In the news articles I'm finding on the auto sector it seems like most of the big companies are selling far less cars then normal so overall they are making far less profit. I also have to imagine that when they shut down a factory for weeks at a time because of supply issues that even with work suspended there are significant costs associated with that idle factory that is now producing zero cars.

 

[JASmith]

In the news articles I'm finding on the auto sector it seems like most of the big companies are selling far less cars then normal so overall they are making far less profit. I also have to imagine that when they shut down a factory for weeks at a time because of supply issues that even with work suspended there are significant costs associated with that idle factory that is now producing zero cars.

I wonder how much of that is covered by the tax payer though. I recall them setting aside huge sums of money going to the big companies to compensate them for low sales. Giants like Amazon and Walmart have become hugely more profitable, in spite of having been forced to shut down their operations and having supply chain issues, with personal profits to Bezos and the Walmart heirs having grown $118 billion since the pandemic.

So from what I've been reading, lower production but much higher profit margins and lower overhead has been hugely profitable to many of the world's big company owners.

I mean it kind of makes sense, look at the profits of Apple, a low production high profit margin business model compared to, say, Dell. I also recall huge fines for LCD manufacturers back in the day that colluded to reduce production and increase prices to that they would all profit more from the low production high profit margin business model.

 

[Bensonr2]

I think mostly what you are referring to is tax payer subsidies. In this day in age most of these manufactures only have large productions inside this country if the local and state governments offer tax subsidies to setup shop there. But that doesn't mean the state is paying for the factory, it means if they normally would pay 10 million in taxes they are only now paying 5 million for the first few years so they come to their state and create jobs.

Also your chart seems to be mostly about the net worth of CEO's relative to what workers are getting the pandemic. And most of the net worth of CEO's is the value of their stock options. So the value of many of these companies have skyrocketed. But that is not liquid assets nor does it mean the revenue of the company has gone up that much (though Amazon certainly has). And the chart is specific to Amazon and Walmart which have expanded their sales during the pandemic.

So again I'm seeing a lot posted that the overall revenue of the auto sector is likely way down this year so I think you are wrong on this point.

 

[JMII]

Dodge/Ram for example would often have outrageously huge manufacturer rebates which we got on our last two FCA product purchases, but there's nothing now as far as I can tell except for offering low finance.

True... but that is the opposite end of the curve we are on currently. FCA in particular was famous for a pump and dump system of making too many vehicles and forcing dealers to sell them with massive discounts: FCA Dealers Upset by Large Vehicle Inventories OEMs invoice price and hold back to the dealer still includes a health profit margin (in theory) so having rebates doesn't completely wipe out the gains they get from moving the metal. Plus they have to recoup the R&D costs and the only way to do that is with high volume or expensive models or trim. This is why your see OEM canceling poor selling models which often starts with eliminating little eco-boxes in favor of more profitable, bigger vehicles or loaded models that have wider margins.

 

[LittleBokey]

I think mostly what you are referring to is tax payer subsidies. In this day in age most of these manufactures only have large productions inside this country if the local and state governments offer tax subsidies to setup shop there. But that doesn't mean the state is paying for the factory, it means if they normally would pay 10 million in taxes they are only now paying 5 million for the first few years so they come to their state and create jobs.

Also your chart seems to be mostly about the net worth of CEO's relative to what workers are getting the pandemic. And most of the net worth of CEO's is the value of their stock options. So the value of many of these companies have skyrocketed. But that is not liquid assets nor does it mean the revenue of the company has gone up that much (though Amazon certainly has). And the chart is specific to Amazon and Walmart which have expanded their sales during the pandemic.

So again I'm seeing a lot posted that the overall revenue of the auto sector is likely way down this year so I think you are wrong on this point.

I think it is pretty clear, manufacturing is down due to shortages. But also the cost of manufacturing is up as well due to the shortages. This lowers available inventory. If demand is high, which it is, that drives up the prices (also known as inflation). Dealers are selling lower volumes, hence they try and make it up on profit per sale. In the end, we the consumer pay the price. Lack of workers, transport and an overall high inflation rate are just icing on the cake.

 

[Bensonr2]

I think it is pretty clear, manufacturing is down due to shortages. But also the cost of manufacturing is up as well due to the shortages. This lowers available inventory. If demand is high, which it is, that drives up the prices (also known as inflation). Dealers are selling lower volumes, hence they try and make it up on profit per sale. In the end, we the consumer pay the price. Lack of workers, transport and an overall high inflation rate are just icing on the cake.

Agreed, I think the disagreement is that this might somehow be a situation that the manufactures would like to continue. And I think overall they are probably desperate to get out of it. Overall revenue is down period. It looks like stock prices are holding steady, and that's probably because there is evidence of strong demand is spite of the pandemic which means if supply issues can be overcome sales will go back to normal. But if supply is this constrained long term ultimately the major manufacturers are going to suffer because overall revenue will suffer.

 

[Trucklet4me]

...As a software engineer I in no way shape or form would get in a autonomous car. You should see the bugs we have on the simple programs we have now. You trust someone else's software to keep you safe? I wouldn't....

Right? 🤪

 

[monogodo]

Chips, drivers, toilet paper, importers, customs delays at ports of entry... the whole supply chain is a mess. I work for a large, international manufacture of printing equipment and we are struggling to get unit into the US, especially by sea. We have resorted to air freight but even that is challenging due lack of drivers, riggers, warehouse workers, etc. Just last week we had a supplier shipment get bumped off a flight for medical supplies which are more critical.

As stated in the article due to work from home chip allocation went into business equipment and since many were not driving to work auto makers cut back on orders. Now they have to get back in line. Ford has thousands of vehicles just sitting waiting for chips. The C8 has suffered massively with plant shutdowns, parts delays and work stoppages. GM could only make about 1/2 what they originally planned for. Chevy and Nissan removed some features from their vehicles to try to keep up.

The SC launched into a difficult situation so us consumers are just hosed until the situation gets resolved. The real questions is are we 6 or 12 months away from things returning to normal, or is this our new normal?

We just switched printer vendors at our school district (I work for the printing department) from C** to X**. Delivery of my printers was delayed, and when the two black & white machines arrived, they didn't have the 3-hole punch assembly in the finisher, due to "production delays". I've had the printers since late July, and I still don't have the punch assemblies.