Posted: 09/17/2021 | Author: Jim Lochner | Tags: Thought Leadership
When the pandemic hit, freeways, auto factories, and dealerships went quiet. Sales plunged 40% within a month, traffic decreased by more than 70% in major cities, and hundreds of thousands of workers went on unemployment. Factories had to reconfigure to deal with Covid restrictions, and production eventually recovered.
Dealers and automakers were also forced to shift their marketing efforts to online sales. At least 80% of car buyers now use laptops or smartphone apps during some part of the shopping process. More and more are completing the entire transaction virtually, with dealers dropping vehicles off at a buyer’s home or office.
Then in January, a global shortage of microprocessor chips once again ground assembly lines to a halt.
The Chips Are Down
There are at least two dozen microchips in every car; some luxury vehicles have more than 100. So when vehicle assembly plants closed last spring, chip suppliers diverted the parts to other sectors like consumer electronics as Americans snapped up webcams, laptops, video games, and smartphones to stay entertained and connected during stay-at-home orders.
The chip shortage has also exacerbated efforts to refill dealer inventory. There are 1 million fewer vehicles on dealer lots than usual at this time of year. As a result, dealers only have 942,000 cars and trucks in stock for retail sale, compared to 3 million before the pandemic. And the inventory that does make it to dealers replaces the vehicles being sold. Since dealers can’t increase their inventories, prices for new and used cars and trucks have skyrocketed.
In June, the average price for a new car was over $42,000, and used car prices reached a record high of $38,000. At this time last year, 18% of used vehicles were listed below $15,000—this year, only 1%. In addition, low interest rates from lenders, high credit scores, and extra consumer savings have turned the buying process into long waitlists for dwindling inventory and shoppers willing to pay over sticker price.
But there’s good news on the horizon. The increase in new and used vehicle prices has slowed down in recent months. From June to July, prices for new and used cars rose 1.7 and 0.2%, respectively, compared to 2.0 and 10.5% from May to June.
You Got to Know When to Hold ’Em
Since fewer people are able to buy a new vehicle, car owners are holding onto their older cars longer. But as the chip shortage continues, repairs for aging—or any—vehicles could face delays and supply shortages. That goes for manufacturers as well, with the shortage of replacement parts grinding production to a halt. So whether it’s a simple replacement wheel cover or an expensive piece of welding equipment, automakers and dealers are looking for ways to protect their mechanical investment. Enter the environmentally sound answer—dry ice.
Dry ice blasting can help with cleaning, surface preparation, and parts finishing. Cold Jet, which holds the original patent for modern dry ice blasting equipment, is dedicated to protecting the environment by not producing hazardous waste streams.
The dry ice used in Cold Jet’s blasting process is made from reclaimed CO2, which is a byproduct of other industrial processes that would have otherwise been released into the atmosphere. Dry ice blasting also eliminates harmful secondary waste by sublimating solid contaminants into a gas, eliminating potential hazardous downstream contamination that can harm the surrounding area and installations. And since dry ice blasting is a non-toxic, food-grade media approved by the EPA, FDA, and USDA, it eliminates the need for cleaning solvents in many applications. Dry ice blasting can be used in everything from mold cleaning and surface preparation for coating and painting to composite tool, welding, and foundry cleaning, parts finishing, and more.
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The chip shortage is expected to cost the global automotive industry $110 billion in revenue in 2021. Many predictions say that it will be Q1 of 2023 before the situation returns to pre-pandemic levels. In the meantime, manufacturers and dealerships must preserve their auto inventory. Dry ice blasting not only decreases cleaning time and labor costs, it increases productivity, reduces downtime, improves part quality, and reduces scrap, all while being environmentally responsible reducing harmful chemicals.
Ice, ice, baby.
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