During the Great Recession, it was a collapse in demand as consumers went on a buyers’ strike and decided to drive their vehicles for a couple more years instead of trading it in; and they kept doing it for years. Two of the Big Three US automakers filed for bankruptcy protection, along with many component makers.
This time, the situation is so screwed up that it is hard to figure out what demand actually is. We only know that it exceeds supply. But supply has been thrown into total chaos by the semiconductor shortage that has triggered plant shutdowns globally.
Over the past few months, inventories of new vehicles have collapsed. People were ordering and waiting patiently until the vehicle gets in. Others grabbed what was still available when it came in. And prices have spiked as automakers have cut back on incentives, and dealers are selling over sticker, and automakers are prioritizing higher-end models, which is where the money is.New Vehicle Sales Plunge as Prices Soar amid Supply Chain Chaos, Chip Shortages, and Depleted Inventories | Wolf Street