I can't imagine anyone would want the car you described, for market-sized values of "anyone"
The latest Dacia Sandero is selling better than all other models in its class for a few months now - even if it's basically a revamped last-gen Renault Clio with even lower quality interior and safety features. Some people prefer a basic, cheaper car.
Is that because it's literally impossible to buy other cars since they have a chip backlog though? Is it worth redesigning a car for a trend that will be gone next year?
What I'll never understand is why carmakers don't take advantage of this situation and address a market that's been literally BEGGING for decades for a new product: A simple, basic car, with the ONLY electronic control being for: - Valve timing - Fuel injection - Oxygen and throttle - Emissions There's a market for budget and privacy oriented customers that all carmakers seem to have ignored for two decades now. Give…
most things you mention are mandated by the government, you can't sell a car in any western market without tire pressure monitoring, stability control, back up camera etc. the manufacturers have no choice, it would be like suggesting they sell cars without seatbelts.
I have a 2016 Hyundai Accent. Unless the law is very new my car has no backup camera or much else. I'm sure there's an emergency tire pressure sensor but that's about it. Not much to my car.
The aspect of the problem not talked about is that a lot of automotive chips are really, really old. And they are old, because of many certification requirements set partially by the industry, and a few odd governments. In reality, most of them are both less reliable, and harder to work with in comparison to open market parts. The only two things I seen chips with micron scale nodes used in my life were: air conditio…
It’s true that the auto market tends to be behind the times, but regulation is not the cause. That is much more of an issue in airplanes and aerospace in general.
Cars still use micron level chips because:
- They still do the job.
- They have enough volume to keep those fabs open.
- Since they end up becoming the only buyer (monopsony), they get cheap rates.
The "religious reasons" he's talking about are "zero inventory" or "JIT inventory" pioneered by Japanese auto makers in the 80s and 90s. By optimizing inventory management and understanding demand for your product, you can ensure you don't have excess inventory on-site (meaning you don't have money invested in product parts you can't sell and have to pay taxes on). It's the system that virtually every manufacturer (a…
My understanding is that JIT, as performed by Toyota, takes into account the differences in difficulty of sourcing different inventories. If this is true, one would expect that Toyota faced shortages later than other manufacturers. Does anyone have a source proving or disproving this?
Toyota was among the last to be hit. Also, JIT is not having zero inventory. It is about having the right amount of inventory.
@kliment summarized the why pretty well: https://news.ycombinator.com/item?id=26931498 Curious if this is true for all manufacturers.
The "religious reasons" he's talking about are "zero inventory" or "JIT inventory" pioneered by Japanese auto makers in the 80s and 90s. By optimizing inventory management and understanding demand for your product, you can ensure you don't have excess inventory on-site (meaning you don't have money invested in product parts you can't sell and have to pay taxes on). It's the system that virtually every manufacturer (a…
What I don’t see discussed is how JIT has become the “securitization” of manufacturing.
Everyone had an incentive to do JIT, and it improved efficiency in each individual company, but it did so by inflating a systemic risk that could be easily triggered by a “black swan”.
Man - the magnitude / impact of these chips shortages on autos in particular is crazy. Regardless of Opel popularity, in the US the F-150 was a best selling vehicle and massive cash cow and they had unfinished vehicles sitting out. These chips have GOT to be a relatively low margin / somewhat lower cost item (ie, feature size can be large). What a miss not to have more coverage for them.
After a train crash destroyed a few dozen Ford trucks, they sent an engineer who was also handy to pry the chips out of the smashed trucks. They were hand delivered back to the factory.
Normally this would be ridiculous--there are many other parts that were probably more valuable. But now we have people cracking open smashed vehicles like walnuts so they can extract a chip nominally worth a few dollars.
Scalpers are not the problem as they seem, they are like market makers for stock exchanges. They buy low and sell high, always. The factory could tell you that they're currently out of stock for the next few months, but a scalper will never be out of stock, because their prices rises so high that only very few desperate companies would buy. The point is, it's better to have the option to buy something at a high price…
Negative. Like scalping everywhere, they're middlemen who contribute nothing to society, and make it more difficult for people who do.
Some have argued that scalpers, like other risk arbitrageurs, accelerate market price discovery. If you buy the argument that markets are net positive for society by relaying information about economic trade offs, scalpers aren’t necessarily bad even if they are indeed annoying to market participants by lifting the ask. Of course there are extreme conditions where we also might decide that using money as the universal conveyance of value is a bad thing because it reveals how unequal outcomes in society have been… And the usual response is to shift to rationing rather than price to allocate scarce resources. But with rationing you get sidechannel markets and not necessarily efficient allocations.
I can't imagine anyone would want the car you described, for market-sized values of "anyone"
Anyone driving a car thats older than 15 years old is already driving the car that OP is describing.
No, he is driving similar car with a lot of milage on it, especially these days with the crazy used car prices. If Toyota have made a basic mid 2000 corolla with no fancy anything I would pay for it much more than $2000, might install some aftermarket gadgets though but that would cost no more than extra $1000. The question is what would be the sweet price point for such a car and is it feasible to manufacture it for that price.
Scalpers are not the problem as they seem, they are like market makers for stock exchanges. They buy low and sell high, always. The factory could tell you that they're currently out of stock for the next few months, but a scalper will never be out of stock, because their prices rises so high that only very few desperate companies would buy. The point is, it's better to have the option to buy something at a high price…
Scalpers hedge on the fragility of just-in-time - they milk the short-term thinkers for all they saved in the good times and are thus a healthy part of the market. Why do we praise people betting on actors being hurt by bad decisions like ( https://en.wikipedia.org/wiki/Michael_Burry ) but condemn the same behavior on the smaller scale of physical products?
Well, I guess it would be hard to scalp on of the closest managed inventory processes around. Thing is, only the last steps before FAL are real JIT, everything else is pretty much running on, more or less well amanged, inventory. Also, blaming the chip shortage exclusively on automotive and their mismanaged JIT is quite a theory, and an overly simplistic one.