Here’s why you can’t get a new truck

If you’re looking to buy a new truck and have visited dealers lately, you’ve probably learned that you can’t get one, and if you can you probably ordered it a long while ago.

Shortages of microchips that help control the many electronic systems in modern motor vehicles have been well reported in the general media. But lack of everything from chrome grilles to entire engines are causing original equipment manufacturers to delay production, pushing wait times for new heavy trucks and trailers to a year or more. Yes, the COVID-19 pandemic is at the bottom of it, because the millions of cases of illness and death around the world have caused worker shortages in suppliers’ plants in Asia and America.

“The delta variant of the virus has had a slowing effect on jobs,” says Tim Denoyer, vice president and senior analyst at ACT Research, which monitors vehicle production and sales as well as the general economy. “The labor shortage has gotten worse in the last months, particularly in Malaysia and Vietnam,” where many microchip factories are located.

“Virus cases were moderate in both places, then began spiking in July, and the situation worsened. Other shortages include suspensions, wiring harnesses, mirrors, tires, engines and engine components. It goes down all the way to Tier 3 and Tier 4 suppliers. And when they get back into production, the parts go into containers and onto ships. When they hit the ports, there are delays in getting the ships unloaded, and then delays in rail and truck shipping.”

Malaysia is a key link in the supply chain because plants there test and package microchips produced elsewhere, Bloomberg News reported.

This step is more labor-intensive than actual chip manufacturing, which is largely automated. Malaysian plants also make multilayer ceramic capacitors, another key part in electronic systems and products. When a small number of workers test positive for the disease, factory managers follow coronavirus protocols for shutting down and sanitizing equipment. Meanwhile, a fire in a plant in Japan and winter weather-induced power outages in Texas caused further disruptions in microchip supplies. On the positive side, new chip factories and expansions of existing ones will eventually ease the situation.

Here’s another factor: A sudden drop in vehicle orders last year, when the pandemic first spiked led original equipment manufacturers to back off on microchip orders. But they were quickly replaced by orders from computer, phone and other electronics makers, who sold lots of merchandise to customers who began working from home. When the automotive market came back, chip makers couldn’t take the renewed higher volume of orders. Ford, General Motors, Nissan and Toyota are among auto and light-truck builders that have announced factory shutdowns because of the chip shortage. Except for shutdowns during the pandemic last year, Class 8 builders this year haven’t talked about plant closings, though United Auto Workers members went on strike this summer at Volvo’s Virginia plant. That plant is running again.

Nobody knows how long component shortages will last, Denoyer said.

“With the chips, some thought it would end by now, but it didn’t end. Forecasts now are by second half of next year production should be running back where it should be. Not so long with trailers, which aren’t as chip-dependent,” Denoyer said. “The number of ‘red tag’ units – Class 8 trucks that are mostly built but are missing some components – is building up. It’s probably about 25,000 units today.”

Don Acke, president for commercial vehicles at FTR Associates, another research firm, puts the red-tag estimate at 13,000 to 20,000, but that’s still a lot of trucks awaiting parts instead of on their way to dealers and customers.

“In contrast to past experience, where we simply ordered and received parts, we’re now reaching far down into our supply chain to assist suppliers in planning for shortages, navigating constraints, and working to help them keep the upstream flow of parts moving,” said David Carson, senior vice president of sales and marketing at Daimler Trucks North America, the dominant original equipment manufacturer with its Freightliner and Western Star brands. “We’re also working closely with our dealers and customers to communicate clearly and frequently regarding the status of their orders. I’d like to emphasize that, while I know no one wants to hear their truck won’t be ready exactly when they want it, our promise to every customer is to be completely straightforward about delivery times.”

Neil Fyda, manager of development for Fyda Freightliner in Columbus, Ohio, feels the squeeze, primarily in highway trucks.

“We are very short on inventory. Normally, we’d have 300 new trucks on hand. Now there’s maybe five,” he said. “Of the inventory on hand, we are sold out. Of the units coming in, we’re sold out through next year. Walk-in customers, we’re telling them 2023. One fleet customer wanted 300 new units, but we could only supply him with 150. We’ve got owner-operator customers who would love to switch out of an older truck, and we’re telling them, ‘Hold onto it.’ We know that’s going to cause some pain in more repairs on the older trucks, but that’s what it’s come to. If we had them today, we could probably sell 500 trucks in a week.”

The few new vehicles on Fyda’s lot are vocational types, like dump trucks. With few sales and lower revenue in the offing, the dealership no longer discounts prices. That has irked some customers, but they calm down when they understand the supply conditions. And Fyda still has some used trucks, though they’re in short supply, too, mirroring the situation nationwide.

So that older truck of yours might be worth some good money, but if you sell it, what would you run? We live in interesting times. LL