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Chip Shortage Will End in 2023 But May Cause Price Hikes

The pandemic-induced chip shortage is still impeding vehicle production and sales around the globe. Rising car prices and lengthy delivery lead times have become a common problem in Pakistan as well as across the oceans.

While the problem is gradually subsiding, the latest reports state that it will completely normalize by 2023, but may provoke price increases across the board. According to Moody’s Analytics economist Tim Uy:

While the decline is notable given the upward trend in lead times for the past couple of years, 27 weeks is still far from the norm, and we expect lead times to remain elevated going into 2023.

He noted that the pandemic has increased people’s reliance on tech products, digital services, and electric vehicles (EVs). EVs in particular, are much more complex in their function and require more microchips.

Uy speculates that the chip shortage-induced inflation will likely worsen in the coming days as the manufacturers struggle to keep up the supplies for the car and tech industries.

Pakistani Car Industry

The local car industry is already observing non-production days due to logistical issues and the resultant inventory shortfall. Recently, manufacturers have also increased the prices of their cars.

Furthermore, the US Dollar (USD) exchange rate has also started climbing back up. These concerns have started whispers in the car industry of another price hike.