Being accessible to my listeners by email allows me to interact with all sorts of people. I hear from folks who have bought many vehicles, those who have never bought one, people with great credit, bad credit, no credit, and just about every scenario you can imagine. That is one of the things that keeps it interesting. If you are someone who has bought many cars before, you may get to experience something new, something you have never done before, and most likely something you said you would never do…pay MSRP for a car.
In case you don’t know, MSRP is the abbreviation for Manufacturer’s Suggested Retail Price. That is the price the builder of the car deems as reasonable. Many have never paid that amount for a car, much less pay that and be HAPPY to get it for that amount. The good news is, the winds of change are upon us.
Some people won’t have the stomach for this new way to buy a car. As I have been talking about for more than six weeks, the sudden gas spikes have caused a shortage of many of the popular fuel-efficient cars. This was prior to the horrific earthquake and tsunami that hit Japan a little more than a month ago. That event made a bad situation worse and we haven’t even seen the worst of it yet.
As you would expect, the car manufacturers are trying to stay as positive and upbeat as they can. Any shred of good news and that I am getting directly from them is conveying the message that the situation is not as bad as they seem. However, I am not buying it! In my view, it may all come down to one company called Renasas Electronics.
Renasas supplied 41% of the chips used in cars to the automakers. Virtually every car manufacturer used their products. To make matters worse, every car made uses a minimum of 30 chips to control how the engine runs, the electronics in cars, power steering, air conditioning, and the list just goes on. Some of the more loaded versions of cars may use over 100 chips.
Only one missing chip will halt an entire assembly line. Renasas is scrambling to move production to two other plants, one in Singapore and one on the other side of Japan. Even the most optimistic reports say that it could be two months before they are back up to speed and some think it could be as much as four months, essentially making the 2011 models on the ground and in-transit now, the end of the line for this model year.
In this recall crazy world we live in today, automakers will not risk an inferior chip that could fail and harm their reputation and possibly injure their customers. There is a fine line in manufacturing between make a good product and a good product quickly, especially in electronic components. If the chips are already short in supply, to have a recall and use a chip to repair an already built car is a double whammy and keeps a much needed new vehicle from being manufactured.
There is a shortage of small, fuel-efficient cars right this minute. Prices will go up, and incentives will go down. If you are someone who has said “I will NEVER pay sticker-price for a car” you may find yourself on the sidelines. If gas prices stay high for a while, and you have to pay MSRP for a car that will save you $1000 at the pump over the next year, I would not rule that out, just to be able to say you got a discount.
The months ahead are shaping up to be most interesting.
Jerry Reynolds is The Car Pro Show heard Saturdays 10 am to 12 noon on News Talk 650 KSTE AM and 12 noon to 1 pm on News Radio 1530 KFBK AM. Jerry is a member of the Texas Auto Writer’s Association and is the former Owner of a large chain of automobile dealerships. He also serves as the Automotive Expert for FOX 40 in Sacramento. Jerry can be contacted at: www.carprousa.com