Earlier this month, there was an “amazing article” at The Drive about the current semiconductor shortage, written by some “tech-writer” chump who’s never set foot inside a dealership. I know it was amazing because all of the usual suspect idiots on Twitter told me so. It’s a wonderful example of the Gell-Mann Amnesia effect, except in this case I absolutely remember that everything else written at The Drive is also complete and utter garbage, not just this particular piece of writing that falls within my expertise.
Outside of the technical content that anybody with an internet connection could verify, all of the conclusions that this author drew are completely false, some of them harmfully so. I really don’t want to do this, as my heart rate doesn’t need the additional stress, but I feel an obligation to you to point out how incredibly stupid everything in this article was.
Let’s start here:
“Toyota was initially unaffected by the shortage. The Japanese automaker—already arguably the industry leader in logistics management—had learned to stockpile electronics following the 2011 nuclear disaster at Fukushima and had remained in good standing for months compared to other automakers. But over time, it acknowledged that it would build fewer of some models, like the Tundra pickup, to ensure that it had continued capacity of units with higher margin or volume. However, the automaker recently had to idle its Toyotetsu plant in Ontario, Canada to combat an outbreak of COVID-19 cases. This led to a suspension in production for the Toyota RAV4 and RAV4 Hybrid, as well as the Lexus RX 350 and 450h Hybrid. While not directly semiconductor-related, it is a prime example of how fragile the global supply chain really is.”
This is a wonderful example of calling the manufacturer’s PR department, most of whom you’re really good buddies with, and simply copying and pasting the email they sent you. Wouldn’t you assume, after reading this, that Toyota dealerships are doing just fine with inventory?
And then you’d do a search at your local Toyota store and see that they have approximately 18 new Toyotas in stock. Total. And then you’d notice that half of those don’t even have pictures, because they’re not even really there yet—they’re still on a truck or a boat or possibly not even built yet. One of my Toyota clients has asked me to please stop advertising that they have new cars, because they don’t have any left.
Dear editors at The Drive: try some journalism next time.
Let’s see what they have to say about Hyundai:
“Hyundai’s North American operations appear to be largely unaffected at this time, as its Alabama plant continues to churn out vehicles. The automaker told The Drive that it continues to manage its semiconductor and microchip supply effectively and that its purchasing team at its Alabama plant is working with its global teams to prioritize allocations based on market demand. While Hyundai’s vehicle supply seems fairly stable, the automaker did temporarily idle its Ulsan, South Korea plant in April, which builds the U.S.-bound Accent.”
I went to a Hyundai store in a larger market the other day, and their comment was, “Well, we might not be able to sell any cars, but you can land a fuckin’ plane on our lot, no problem. Could be a source of extra income.” I have three Hyundai clients. All of them are completely out of Venue, Santa Fe, Tucson, and Palisade. I don’t know if y’all know this, but Hyundai mostly sells Venue, Santa Fe, Tucson, and Palisade. One of my clients is receiving a total of one new Hyundai to sell in the month of May. ONE. Good news though—they got TWO Genesis!
Mr. Drumpf added this bit of insight later on in the piece:
“The United States only produces around 12 percent of the world’s supply of semiconductors, which has easily created a foreign dependency on components critical to most amenities used by Americans every day. In his recent infrastructure proposal, President Biden called for $50 billion to boost U.S. production of semiconductors by creating productive incentives and the establishment of a National Semiconductor Technology Center for research and design.”
Here’s a tweet by the author:
The U.S. invested heavily in plastics and dumped steel long ago; China still considers steel worthy of being subsidized and can produce it for pennies on the dollar compared to our cost now. Protectionism tariffs do not help the consumer.
— Rob Stumpf ⚡️ (@RobDrivesCars) July 21, 2018
I wish I had the time to go back and research every time that somebody at The Drive made fun of “America First,” or “Make America Great Again,” I really do. Just assume it was a lot and that he’s completely unaware of how we got into this situation in the first place. There’s also a stunning lack of self awareness on the part of The Drive’s editorial staff, but nobody is surprised by that. These are some of the same people who used to insert gender neutral language into every review I turned in at Jalopnik.
Nowhere in the piece (of trash) does our author even begin to mention the root cause of this inventory shortage—on-demand manufacturing. You know why? Because then he wouldn’t be able to talk about how awesome it would be if everybody could order cars directly from the manufacturer.
No, wait a second, I’m giving him wayyyyy too much credit. It’s not just improbable that he doesn’t understand how vehicle allocation works at dealerships, it’s “Detroit Lions Win The Super Bowl” levels of impossible. But talk to literally any GM of any dealership, and they’ll tell you that the reason we have no inventory on the ground is because OEMs have refused to just keep the assembly lines running in the past—had they done so in 2019 or 2020, we’d be fine now. But they didn’t compete with laptop or video game console manufacturers for microchips, because they were building to SAAR levels instead of just producing inventory.
Okay, so that’s all fine and good and I got some vitriol out of my system. But what does all of this inventory shortage stuff mean to you? Let’s see…oh it means exactly the opposite of what The Drive told you!
God damnit, here we go again.
“So if you’re looking for the best deal on a new ride, now might not be the best time to buy, especially if you don’t want to be upside down on your loan in a few months.”
This is an epically fucking stupid thing to say.
Trade-in values are at an all-time high. I repeat, trade in values are at an all-time high. Every dealer realizes that he or she will be in the used car business for quite some time to come. The amount of money that you can get for your trade now will likely more than make up for any lack of discount that you may or may not receive on the new vehicle, especially if you’re buying a less popular model or trim.
But what you should really do right now is lease, doubly so if you have a trade. But do not apply the trade to the lease. Simply sell your old car for top dollar, pocket the cash, and then lease a new one at a promotional rate with zero down.
And here’s the kicker—you might be able to trade in that lease for a profit in 12 months or less, pocket more cash, and then do it all over again, because there is no sign that the semiconductor shortage is going to resolve itself any time soon. Even if it does, there are other supply chain issues coming down the pike (tires, foam) that will fuck everybody again.
So let’s come back to that Gell-Mann Amnesia bit again—the next time you are even remotely considering taking anything that The Drive says seriously, remember how completely and utterly wrong this article was, and then remember that they are largely run by people living in NYC who don’t own cars, and then you can remember that they also can’t drive their way out of a paper bag.
And then, please, delete your cookies and browsing history, just to make the rest of the internet safe for information about the auto industry. Somebody should nuke their servers from orbit. It’s the only way to be sure.