The automotive industry experienced a shortage of necessary chips to build cars in 2022, causing the cost of cars to dramatically increase. After recovering from the shortage, auto worker strikes are driving the car market back into a decline.
The insufficient supply of microchips ruined the 2022 car market, as manufacturers were unable to make new cars with the proper technology to be market ready. An estimated 19.6 million cars were cut from production as a result of the shortage.
Prices of new cars are estimated to rise on average 17.5% compared to the prices a year prior. 2022 also experienced a national average of $3.95 for a gallon of gas. Americans lived through a time of extremely high cost of ownership for a car, along with many other expenses increasing such as groceries and rent.
Senior Dan Starkenburg commented on the changes that come with high car prices. “You can’t be as picky as you normally can be,” said Starkenburg. “Cars that would be at a fair price are going to have more issues than they normally would because of the inflated prices.”
The microchip shortage created a high priced car market, and buying a car was close to impossible with these prices and limited availability. The market recovered and prices went back to normal in early 2023, but major companies are now experiencing strikes from their workers, which will inevitably bring back the high prices from 2022.
United Auto Workers (UAW) went on strike on Sept. 15, shutting down and slowing production for auto companies General Motors, Ford Motors and Stellantis. Ford’s largest production plant in Kentucky was shut down from the strike, stopping the production of their large SUVs and trucks.
Companies are trying to settle with the UAW, and despite being offered a salary increase of 20% to permanent workers and 26% for part time employees, the UAW has rejected the offer for now.
“They should really only ask for 10% or something not as crazy,” suggested senior Andrew Hauf. Salary increases are generally around 2%-5% per year, but UAW workers are asking for raises of up to 40%.
Hauf continued to comment on the UAW’s requests. “If they are severely underpaid, then it can be justified. But otherwise they are asking for too much.”
If the UAW and big three auto manufacturing companies are unable to reach an agreement on salaries and working conditions, the auto market will rise once again and cause unbearable prices and potential job closings for American citizens.
Nikhita Nallu • Oct 22, 2023 at 11:12 am
Great article! I’ve noticed that used cars are going for almost the same prices as ones on the market, due to the demand.