Joel Mickelberg of Warminster was coming to the end of the lease on his 2020 Lexus RX350, so he returned to the dealership where he leased his two previous Lexuses, Thompson Lexus of Doylestown.
He decided to go hybrid with a 2023 Lexus RX350h, but was surprised when he picked up his vehicle in December: the car only came with a key fob. This may seem like a minor inconvenience, but so many automatic functions are tied to user profiles, which are loaded with the key.
“I would think they would move heaven and earth not to deliver vehicles with a single key,” Mickelberg said.
Lexus with just one key fob. A Chevrolet Silverado is missing rear seat heaters, park assist, and steering wheel trim. A Mini Clubman without a heated steering wheel. A Buick Enclave without parking assist technology. BMWs without lumbar support or touchscreen features.
As the U.S. auto industry struggled to supply vehicles amid increased demand during the pandemic, one way automakers were able to meet orders was by shedding some non-essential components.
It’s hard to find real information on how many vehicles were built this way. No independent company tracks the data, and automakers don’t really advertise it, but it exists in showrooms and on window stickers everywhere. Remove: heated seats. Remove: Power tailgate.
Expectations versus reality for tokens
A chip in your vehicle needs to be highly reliable and proven because it’s called upon to function in extreme weather conditions, explains auto analyst Sam Fiorani, vice president of global vehicle forecasting with Automotive Forecast Solutions in Chester Springs.
Chips first came to automobiles after the gas crisis of the 1970s, according to a Forbes essay by Willy Shih, a Harvard Business School professor and co-author of the book. Producing Prosperity: Why America Needs a Manufacturing Renaissance.
Also known as semiconductors, the chips now make up things like the body control module, which control systems like power windows, door locks and side mirrors, replacing the mechanical components that usually ran those systems. If these systems were not unreliable to begin with, they became so over time.
“The automotive industry is considered the most important part of its suppliers’ business,” Fiorani said.
But the tried-and-true chips used in vehicles are less cost-effective than the newer versions that power cell phones, computers and video game consoles, Fiorani said, things that consumers were snapping up in droves in the pre-vaccine days, when everyone I was stuck at home and no one was driving anywhere.
At the start of the pandemic, when the number of car sales fell, the auto industry got off the queue for computer chips, assuming they would be the top priority when it needed supplies.
But it was not so. Instead, when automakers were ready to resume building vehicles, they found themselves at the back of the line, leading to the chip shortages we’re still experiencing today.
“When it comes to semiconductors, they found they’re not the biggest ones out there, the industry just isn’t used to it,” Fiorani said.
readaptation frustration
It’s been hard to tell if the lack of options is affecting sales, as automakers still couldn’t keep up with demand. New car sales have fallen to around 13.7 million in 2022 from just under 15 million in 2021, mainly due to production issues.
But surely many buyers who saw luxury cars like Mercedes with cranks and manual pulls for their seats or Audis that needed to put a key in the ignition instead of push-button start were not impressed.
And while he’s not buying luxury brands, he counts Michael Abrams among them.
Ambler, 44, has a lease on a 2020 Mazda CX-5, and his wife, Jenna, has one on a 2021 Volkswagen Atlas. They visited dealerships recently to see how to replace their vehicles, but have decided to extend their leases and will probably just buy the vehicles outright when the extension ends.
“None of the Mazdas on the lot have electronic tailgates because they don’t have chips,” Abrams said. “The VW dealer had zero SELs on the lot that had power tailgates.”
Of course, later modification is promised or credit is offered. But it’s a frustrating situation for everyone.
Still, many consumers have just moved on and bought new vehicles anyway.
Among those shoppers is Jeanine Amann of Honeybrook. She owns a 2022 Toyota Highlander SUV that doesn’t have many of the features she wished it had: no memory seats, heated seats, or even leather seats. But the 2012 Mazda CX-9 she owned with her husband had blown an engine early last year and the couple were stuck, so they bought the only Highlander on the lot, a black one.
“Having cloth seats with two kids and three dogs is not ideal,” said Amann, who with her husband, Jonathan, owns Amani’s BYOB in Downingtown. “Of course we have stains and smells and things like that.”
Buyers like Amann are probably more common than auto industry insiders and leaders expected, said Joseph Yoon, a consumer information analyst for the all-auto site Edmunds.com. A lot of people thought that buyers wouldn’t settle for cars without a lot of extras.
“I think the opposite was true, and people didn’t care,” Yoon said. “They were, like, hey, I need the car right now.”
However, consumers looking for the right options have their own issues to contend with.
Joe Velten of Warminster invested his money in a 2023 Honda HR-V in November. And now, inside April, still drives her 2015 GMC Terrain with 90,000 miles on the odometer.
The 79-year-old retiree wants the top-of-the-line HR-V EX-L with heated seats in his choice of color, Nordic Forest Pearl. (After teaching English at Archbishop Wood for 52 years, and even now as a volunteer, he has earned it.)
“What frustrates me is obviously dealers want to sell what they have, but there’s no real way to order a car,” Velten said. “I can go to a furniture store and ask for a specific piece of furniture, in terms of the color and style I want.”
Relay ahead?
Automakers expect some relief in the second quarter of 2023.
“In terms of overall supply chain shortages, our plants continue to face intermittent production delays due to many supply chain disruptions, and we anticipate challenges for the first quarter of 2023,” Leigh said Anne Sessions, senior director of Lexus Communications, in a pre-earnings email. they were released earlier this month.
Matching Sessions’ expectations, Mickelberg confirms that the second key fob for his Lexus is expected to arrive in the second quarter. It already received its all-weather floor mats in January, another item left off the RX350h.
And the outlook remains challenging for brands across the spectrum. Among the vehicles hardest hit, according to data from Auto Forecast Solutions, is the Honda Civic, which is estimated to have lost more than 40,000 units in 2022. That means the company built 40,000 fewer Civics than it had planned due to the shortage of chips.
The Chevrolet Equinox, Sierra and Silverado are expected to be hit hard in 2023, with more than 100,000 vehicles expected to likely not be built. The Ford Edge and F-Series as well, although the numbers could change if semiconductor production picks up in time, Fiorani said.
But Fiorani believes the real solution lies further in the future, when the Science and Chips Act, signed into law in August, begins to push microprocessor manufacturing on the ground. He said it’s the key to getting the chips up to vehicle production speed.
But it will not be an overnight solution, as factories must be built and workers trained.
“These things take time and a lot of money,” Fiorani said.
