NEW CHIP SHORTAGE | Here's What They AREN'T Telling You | Episode 946

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It's noon here in Ventura City, New Jersey, and well, I have no idea where Zach is today

other than Washington, D.C. This is CarEdge Live for Monday, October 20th with your host,

me, Ray, here in Ventura City. Well, Zach is sitting in front of...

Savannah, Dad. Savannah, Georgia. I had the privilege and honor this morning of being

interviewed by one of the local news stations down there in Savannah, Georgia.

You want to know what they wanted to learn about that?

Our AI agent. They wanted to learn about CarEdge, folks, not just about the AI agent,

just about CarEdge. The reality is, CarSite show you fake prices.

Our team at CarEdge, we're here to get you the real one. When it comes to buying a car,

please, folks, if you haven't already, check out our website, caredge.com.

Learn more about CarEdge Pro, which are the tools and the AI agent you can use to help you buy a

car. Most importantly, our car buying services. Click on that. Meet the team that's here to

help you save thousands and plenty of time when you go to buy your next car. Check it out back

at caredge.com and a tremendous thanks to the Savannah news station that interviewed me this

morning. Dad, the big story we're going to be covering is there is a new chip crisis looming,

and I think it's gone from looming to actual reality. The next barrier chip crisis. Get ready,

folks. This is the new thing we're going to be talking about, Nexperia. Dad, what is Nexperia?

Are they the long-lost cousin of Stellantis or someone else?

They're the long-lost cousin of somebody else. They are a small Dutch chip manufacturing company

that is actually a Chinese chip manufacturing company. The Dutch government threw the Chinese out,

and the Chinese are saying, well, that changes things. If that changes things, then we're not

going to produce the chips that are needed. They control 40% of the chip market for automotive.

Go figure. A small Dutch company. It's interesting to have the chips that they produce are not

necessarily the most high-tech. They're actually the more basic chips and diodes and things like

that that these automakers rely on, which should hopefully mean that this chip crisis gets resolved

fairly quickly because they can go to backup suppliers. To your point, this one company owns

40% market share. When they go out, which to be clear here, it's a bit of, I mean, I actually

don't know the right way to phrase this. You go over to Reuters, and Reuters has this headline,

which is good to see. Next, Perius says, Chinese unit operating as usual as tensions with Netherlands

run high. It's a Chinese company operating in Netherlands, but also has offices in China.

The Netherlands offices are the ones that are no longer operating. The long and short of it,

without getting too deep into the weeds, is you're going to have 40% of semiconductors that are

being produced for automobiles not being produced for the time being. That has huge ramifications.

We've literally watched this movie before. What happens when there's a chip shortage?

It creates a giant justification for the industry to increase prices on things,

withhold supply at the exact same time. Dad, last week before this story broke,

what were we talking about? How finally supply is starting to build back up?

And now what are we talking about? One week later, oh, there's a new scapegoat,

a new chip shortage. Are you kidding me? It does not necessarily bode well.

We know what happens when there are vehicles that are scheduled to be produced that ultimately

end up not being produced because they don't have the requisite chips to produce them.

So inventories shrink, leverage shifts from the buyer to the seller.

And I'm not talking about the basement. I just heard it funny. I'm sorry.

So just if this comes to fruition, I mean, they supply 40% of the chips for,

I don't know, people like BMW, VW, others. They are a major supplier of the chips and diodes and

transistors that are needed for the electronics in many of the automobiles that get produced.

And yeah, this is like a summer rerun that was four or five years in the making.

We know what happens when they can't produce the requisite number of vehicles that they'd like to

produce. What happened in the past was, well, they took what chips they had and they only

produced the most expensive, highest profit margin vehicles that they could.

We already know that the average MSRP today is for all new vehicles after there is in excess of

$50,000, which is unaffordable for the vast majority of people. If there is a chip shortage,

it will only get worse. And I know I read the comments, oh my God, I've been following you guys

for years, you're nothing but doom and gloom. I can't help it. I'm not the Chinese government

and the Dutch government fighting over this chip manufacturer and how it's going to be done

and how that could impact the industry. The doom and gloom is that there's many things that go on

out there that we have no control over. And these are things that unfortunately need to be discussed

so we can prepare ourselves for what the outcome might be. Now, Dad, this is not a small company.

I want to put this into perspective. They employ 12,500 people. So this is a massive company that

now, yeah. That's only 12,450 people more than you. Dad, it's nuts. It's absolutely crazy. This is

massive, massive company. And automakers are taking notice. Let's dive in here. BMW said parts of

its supply network were affected but declined to offer more details. It said auto production was

not yet disrupted. Mercedes. The key words there are not yet. Yep. Mercedes says it was in touch

with relevant stakeholders without giving further details. A spokesperson declined to say whether

next period was part of the company's supplier network. VW Group has set up a task force to look

into how its biggest suppliers and their hundreds of components are potentially affected. While the

group doesn't source next period chips directly, some go into components used in their vehicles.

A Stellantis spokesperson told Automotive News Europe that the automaker is, quote,

collaborating with next period and other suppliers to assess potential impacts and

develop mitigation measures. Renault is monitoring the situation. Mega supplier Bosch told Bloomberg

that it was in contact with next period, which is one of its electronic suppliers. Bosch is working

to minimize any potential impact. So this is going to have ramifications across the board. And you

can see here, dad, risk cannot be mitigated down to zero. So can you switch to another supplier?

Sure. But it's not like that can happen super quickly. And it's also not like you can do it in

flight particularly quickly. So this is going to have a big impact. And I think to Mr. C.

Northeast right here, imagine that justice sales start to slow down. There's a chip shortage. I do

not believe that auto manufacturers created this. It is absolutely not stead that right now, right

as we're starting to see inventory levels rise, which we'll touch on a bit more in a second here,

there's a new chip shortage, a new scapegoat. The timing of this could not be any better for

the auto industry. It reminds me of when the UAW was going on strike. It was right when

Stellantis Ford and General Motors had an oversupply of inventory. It's like, these things just get

timed out pretty dog on good for the automakers. I think the word is fortuitous. Is that the word,

I believe? Yeah. Go figure. I mean, it's like Kismet. It's like, all this stuff just falls in

the place perfectly. Like, I don't know, there was a hand over here and then a hand over here and said,

well, let's put this together now, because it sounds like a good time for it to happen.

Yeah. There's a lot of craziness in this world. There's a lot of interconnectivity,

and there's just a lot of things that we don't necessarily understand how and why they happen.

Oh, I know the why. The why is greed. We don't understand how they happen. Well, maybe we do

because of the greed. We just don't understand when they're going, oh, maybe we do, because

it's all because of the greed. There is a common theme there, and the theme is greed. If you can,

if just follow the money, ladies and gentlemen, just follow the money.

So, Pops, what do you think this is going to do? If this turns out to be something that's

kind of like quick, then maybe it doesn't have that big of an impact. I mean, if we're talking

like a week of production, that's not going to blow up the car market. But if this becomes prolonged,

again, do you think it'll have a similar impact to what happened? What was it,

five years ago now, and we had the chip toward four years ago now?

They control 40% of the market. What do you think? Come on. If they controlled 5% of the

market, if they produced 5% of the chips that auto manufacturers used, that's one thing.

It's 40%. So, if it drags on, could it, would it, will it impact productivity and production?

Absolutely, it will. Yeah, it could get extremely ugly for a number of brands out there.

Now, it's interesting to me, so BMW is one of the manufacturers when you get caught up in this.

Gonna do my favorite thing. Let's come to the CarEdge Magic Machine here. And I don't know,

we always go to Arizona or here in Maryland. Where does someone want to go? Where do you

want to go, Dad? Name some where we don't usually go.

You know, I'm going to do a TV show in Portland, Oregon on the 3rd of November. Let's do Portland.

I hear that's a lovely city.

All right, 9720397203. All right, here we go. So, now we're in Portland, Oregon looking at BMW.

So, the thing that I'm curious about, Dad, is what are the current inventory levels in

Portland, Oregon for these BMWs? Because if there is a big impact here on supply, you'd think,

okay, either BMW is going to be really low supply and be kind of screwed for customers,

or maybe the timing is to your point for two of this here. So, we've got an I-4. Let's open up

an I-5. Give me a second here. Let's do like one of their, what is it, like an X5? That's

one of their more popular ones. Yeah, just the five series is a popular vehicle.

All right, let's look at like a 2026X5 and one more. We'll do this one right here.

Okay, so now we're looking, let's take a quick peek, 171 days supply. Well, BMWs are expensive,

man, $88,450. So, if there's 171 days supply and BMW gets hit in this,

it's not the end of the world. It's not good, but it's not the end of the world.

No, and that's, I believe that's one of their electric vehicles. It's an X550E.

You know, so they might find it beneficial to cut back production of some of their

electric vehicles for the United States. Yeah. So, honestly, it could be, could be

fortuitous. So, let's look at another one. So, we did the X5. You said the five series.

So, let's look at the five series. Man, they don't have a ton of five series,

only seven within 50 miles, Dad. See, I actually think this could be built in the case for why

they don't necessarily or wouldn't be so upset if these things, let's see here, 45 days supply.

Actually, yeah, this is already a vehicle that's in relatively shorter. So, it's interesting, Dad.

I think it's going to, will there be an impact on the auto industry with a new chip storage?

Absolutely. Will it have that big of an impact on certain makes and models? I think it will.

On others, they're already oversupplied. So, it does potentially not benefit to the manufacturer.

Yes. No, it's, listen, who it's typically not beneficial to is the customer. Yeah.

Anytime there's an interruption of production, a shortage of production,

that benefits the manufacturer. It does not benefit the buyer.

Yeah, absolutely. All right. So, in other news today, Pops, we've got a little bit on the tariff

side. I don't know if you had a chance to peek at this. We've got, drum roll please,

Trump extends auto tariff relief, imposes truck and bus duties. Yeah. Another day in America,

baby. We got, we got tariff talk even more. So, Dad, the story here, fairly straightforward for

the most part. We've still got the 25% tariffs on medium and heavy duty trucks coming into the

United States as well as 10% on buses. And we've also got tariff discounts being prolonged until

2030. So, if you're doing final production of a vehicle here in the United States,

you should be good to go for the foreseeable future. This should help mitigate, yeah, this

will help mitigate the, the impact of tariffs on vehicles that are actually produced here.

Yep. So, that would be a good thing. And we know, Dad, it's been super interesting. Ford and

General Motors have been advocating for these tariffs to go into place while Stalantis here

does not do final production of their vehicles or their heavy and mid, mid duty trucks here in

the United States has been trying to lobby to get rid of them, which is super interesting.

Yeah, it's, you know, the whole world is trying to wrap its head around what we have to do,

how we have to do it in order to mitigate the costs of tariffs. And, you know, we'll just,

we know that through the first 10 months of the year that vehicles produced in Mexico and Canada,

there was a $10.9 billion tariff impact on those vehicles that the manufacturers have

largely eaten for the most part. So, perhaps with this, with this tariff relief for vehicles

that are completed in the United States, that will make it easier for these manufacturers to

continue to eat the tariffs on the vehicles that are being produced in Mexico and Canada.

Are you surprised we haven't seen this chart go kind of hyperbolic yet? And what this chart is

showing you is this is advertised prices. This is not actual transaction prices. This is advertised

prices. It was just, it was just a test. Okay. So, I can hear anything, Dad. It's all good.

This chart is showing you is a pre-tariff, what advertised, new vehicle advertised prices were,

and then that's before the green line. To the right of the red line, that's post-tariff advertised

prices. They haven't skyrocketed. And obviously, with, you know, some generally good news here on

the tariff front, like, do you think that this is going to go up significantly? I mean, obviously,

the chip shortage stuff we started the show with could drive it up, but it doesn't seem like the

tariffs have had too huge of an impact on actual advertised prices yet.

No, the advertised prices are up. They're just not up as significantly as people thought they

might go. Listen, the longer there's tariffs and the longer that the manufacturers have to

eat the cost of those tariffs, and it impacts their bottom line, and their profit margins

drop from 11 and 12 percent down to 5 and 6 percent. If that were to continue for a long time, then,

yes, they are going to increase the pricing of their vehicles, the advertised pricing of the

vehicles, because they're going to have to build those profit margins back up. Stockholders are

not going to want to see them continue at a 5 to 6 percent profit margin when they're used to them

being at a 10 to 12 percent profit margin. For sure. And we are seeing automakers make decisions

that change where they're producing vehicles, like Jeep just made the announcement at,

the compass will no longer be produced in Canada. Instead, it will be produced in Illinois.

Obviously, to try and get some of that tariff relief. So not only will the automakers not

eat the price or eat the cost of those tariffs in perpetuity,

they're also starting to change where they're producing vehicles, which was the intended impact

that this was supposed to have. Yes, no, absolutely. The intended impact was to increase

manufacturing here in the United States. So, yes, it appears as if it is doing what it was

intended to do. And we are seeing at this point only slight price increases in the advertised

prices of the vehicles. And we could see moving forward higher price increases. But we'll see

what happens. But I think this Jeep story is pretty big news. I mean, yeah, this is all new

Jeep Compass production going to be in the United States. Yeah. And they've been trying to decide

what to do with that Belvedere plant for the longest period of time. And so those who used

to work in that plant will be thrilled to know that, well, the compass production will be

going on there. Now, I have no idea how long it takes the Lantus to bring that facility up

the speed to be able to handle the Jeep Compass production. But we'll find out. I don't think

it's a thing where you just go, okay, it's Monday the 20th, on Monday the 27th, we're moving the

production to Belvedere. I don't think it happens that fast. For sure. Hey, one other story that

we've been talking about last week, or even over the past two weeks, that will impact potential

vehicle pricing, which would be that fire that that aluminum supplier actually had recently. Dad,

we actually saw Jeep shut down some of their manufacturing plans for the Wagoneer and Grand

Wagoneer as a result of running out of aluminum. So this is another thing that we're watching here.

The really level set. Today, we've got a new chip shortage. Yes, yes. We've got some good news on

Terra. Some manufacturers bringing their production here to the United States. And then we have

another supplier issue, which is the aluminum side of things, which has impacted Ford. They've

stopped production of the F-150 Lightning. And now it's the Lantus stopping the production of the

Jeep Grand Wagoneer and Wagoneer. So we're really interesting dynamics here in the supplying side

of a Tier 1 automotive, which then is paired up with the reality that new car inventory has been

building up. Fertuitous timing, serendipitous timing, great timing for the auto industry.

They don't need more new cars right now. They need fewer and they're having all these supply

chain issues and needing to move manufacturing plants as a justification, not to make them.

Are you suggesting perhaps they set the fire at that aluminum manufacturer?

No, I'm not suggesting that at all. Neither am I. It is fortuitous that

there is an interruption in the ability to produce the aluminum body panels that are needed

for certain vehicles that have struggled with sales to a degree.

Yeah, absolutely. I want to take a moment to let everyone know that you can get a free consultation

from CarEdge to see if we're a good fit for our car buying service. Just go to caredge.com,

click on Car Buying Service, and then click on Get Free Consultation. You can chat with us,

schedule a time to talk, or have us call you back directly. This is just a free consultation to see

if our concierge car buying service is good for you, where we match you with one of our concierges.

They do the work and you get the keys. You can meet our team and see what their expertise is

here at caredge.com slash concierge. As I pull that up, I want to remind everyone that if you

click on Research, and then if you click on Where to Go Here, see what others paid, you can

actually see here the deals that our concierge team are able to secure on behalf of customers.

I'm going to sort this down here by date latest. There we go. We can see some of the most recent

deals that this team of car buying experts have been able to deliver. We've got a Ford F-150 Raptor.

Looks like we were trading in a BMW here. Maybe we got the BMW when we were trading in the Raptor,

not 100% sure, but able to get $3,400 off. A Honda Ridgeline, $3,100 off. A Hyundai Onyc 5,

$2,100 off. All sorts of great data here so you can see the capabilities of our team. I just wanted

to give a shout out there before we turn to my favorite segment of today's show, which is

the fact that Ford has more recalls. All right, folks, let's get a guess. How many recalls this

year do you think Ford Motor Company has had? They just announced some new ones. Last time you

and I looked at, what was it? I think like 113? It had gone up to 115 and then it fell back down.

So like 114. So I'm going to guess maybe we're up to 116. So we got a guess of 116 from Pops,

Josh D, saying 116, Dan C, saying 121. We've got 118, 150. Come on, let's get a few more guesses

here. Dad, I'm going to say you're light. I just want you to know you're light. David Langell

at 119, 112, 129. What do you think, Pops? I think it's the first time in a long time I've been

light. You ready, Dad? Not really, but go ahead. No one's guessed it on the nose quite yet. We've

had some close guesses. 120? Dad, 120 is light, 123. Geez, Louise. How is that even possible?

And I know I will see in the comments. Yeah, but at least Ford's admitting that they've got a

problem and they're willing to stand up and fix it. Yeah, probably the fact that the government

mandates that they do it is another reason why. 123. That's insanity. Now, Ford is a second-half

team. They've really put a strategy in place to excel in the second half of 2025. So I wouldn't be

surprised if we see them stretch out that lead even more. Two recalls in particular, Dad,

are impacting hundreds of thousands of vehicles. You've got 625,000 vehicles here

that are being impacted. Whoops, let me pull it up here because of rear view camera and seat belt

issues. So this is going to be impacting. Where is it? Where is it? Where is it? Yeah, here we go.

2015 to 2017, Ford Mustangs are being impacted in that one. We've also got here, Dad, let me pull

it up on the screen. 740,000 vehicles because of camera display, steering and seat belt issues.

Just like the list goes on and on when it comes to Ford, but hundreds of thousands more vehicles

being impacted in there. Now, 123 recalls so far this year. And it could be on anything at this

point. I think we've seen one for brakes earlier. We've seen them for steering wheel issues.

It is just incredible that one brand could have as many recall issues as they do. And yes, ladies

and gentlemen, they step up and take care of them because, well, the government mandates it, but they

do step up and take care of them. And yet for whatever reason, it doesn't seem to impact sales.

It is as if the buying public is willfully negligent when it comes to the number of issues

that they are about to take on when they drive out of that Ford dealership with their new Ford.

It's like, I just, I don't know how you can sell as many vehicles as you do

when you have consistently claimed the recall title. I believe it was five years in a row. And

then last year they relinquished it. And then this year they said, ain't no way we're letting that

happen again. It is mind boggling to me that there is the amount of loyalty to that product

as there is based on, well, how poor it is. Yeah. And dad, back on the CarEdge car search,

we actually track. So if you open up any vehicle, it'll give you recall information. So let's scroll

down here. Let's see. Let's see. Let's see. Let's see. So just on this 2020 F-150 XLT,

there are eight recalls right now. Perfect. Yeah. No, that's great news. And then I believe

there's a way with the VIN, you can plug it into the NHTSA to find out. This link's right to it.

If you clicked on view more safety details. Yes. That'll take you right there. Yeah,

this'll take you right to the NHTSA website for, once it loads, that particular vehicle. So you

can see all of the information. NHTSA is having a moment here loading. But I mean, dad, that's nuts

to me. I mean, that's the first one. It was just a random one. The 2020 F-150 XLT, it's got all of

those issues. Yeah. And what we don't know at this particular moment is how many of those recalls

have been completed or how many are still open. Yeah, let's talk about that for a second. When

you buy a used car and it's got recalls against it, how do you know? How do you know as a used

car shop or whether the recalls have been addressed or not? You go to NHTSA and when a recall's been

completed by VIN. Oh, by VIN. It'll tell you by VIN. It tells you by VIN. So yes, that's how you can

double check to make sure that there's no open recalls and that whatever recalls there have been

have been addressed. Wow. So yeah. So the one thing for certain, for anyone looking at a used car

is in their favorites, they should have NHTSA. They can do the recall check for whatever vehicle

that they are looking at because you can plug in the VIN and it'll pull up and tell you if it has

open recalls crazy. Just go out. Yeah. And again, just to pull up the chart, so this is current year

the pie chart that shows recalls by manufacturer. Obviously Ford with 123 next on the list is

Chrysler Forest River, which are the recreational vehicles at 31 GM with 20, BW with 20.

International Motors, I don't know. Is that commercial trucks maybe or recreational vehicles?

Honda 16, BMW 16, Mercedes Benz 16, Hyundai with 14, Altec again, don't know, and then

Mack Trucks commercial vehicles. So it's not even close. Does it tell, give you the breakdown

as to how many millions of vehicles those recalls impact? Yeah, what's great about the

website is you can just click into anything and you can see what it impacts. And then if I scroll

down here, I can see how many potentially affected vehicles there are. So some of these recalls from

Ford have impacted millions of vehicles, others have impacted just one or two. But yeah, Ford without

a doubt, not even close, have a runaway with the win there. All right, let's call it a show for

today. Again, if we can help folks out with anything, the website is caredge.com. We appreciate

everyone checking out the new website and sharing it with friends. I will mention there is an AWS

outage today. So our website's loading generally normal, but sometimes a little slow. So hopefully

things resolve themselves as the day goes on. Another conspiracy. Need Amazon web services to

figure out, make the internet work again. But anyway, folks, we appreciate all the support.

Please check out the website and we'll be back here doing it all again tomorrow with more car

Edge Live at 12 p.m. Eastern, 9 a.m. specific. Absolutely. Looking forward to it. Have a great

rest of your day there, handsome. And we will see you back here at noon Eastern on Tuesday, the 21st.

See you, pops. Love you. Love you too, handsome.

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NEW CHIP SHORTAGE | Here's What They AREN'T Telling You | Episode 946

About this episode

semiconductor chips

Volkswagen

MSRP

chip shortage

Mercedes

VW Group

Stellantis

BMW X5

days supply

BMW 5 Series

tariff

medium and heavy duty trucks

buses

Jeep Compass

manufacturing strategy

aluminum

Jeep Wagoneer

Ford F150 Lightning

Jeep Grand Wagoneer

Jeep Grand

supply chain issues

new car inventory

Honda Ridgeline

Hyundai Ioniq 5

seat belt

rear view camera

Ford Mustangs

steering

VIN

recalls

GM

Chrysler

Mack Trucks

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