General Motors Expects Vehicle Production Boost

As vehicle microchip supplies improve to give auto dealers more inventory to sell, buying a new car should become easier in 2022, but questions remain of at what cost. 

On Tuesday, February 2, General Motors (GM) announced a projected increase in the number of vehicle inventory from 25% to 30% this year to ship to auto dealers globally. Despite the semiconductor shortage holding back much of GM’s vehicle deliveries in the second half of 2021, the expected jump would make up for lost time and money. 

Even with GM’s prediction, Toyota, for example, has already cut its production target for the month of February due to persistent bottlenecks, in which the forecaster IHS only expects an 8.5% growth in vehicle production globally this year with supply chain shortages continuing into 2023. 

While GM did have record profits in 2021 due to limited output forcing consumers to compete for vehicles in stock at dealers, the company expects to have less profitable sales this year and looks to focus on restoring the production on smaller SUVs and sedans.  

As a whole, GM expects normalization to reappear in the supply of cars, but the company doesn’t expect much profit growth this year. Looking ahead to 2023 and beyond, GM has a vision for improving revenue, but much of that will depend on unproven business models and technologies around EV software, which are already starting to emerge. 

What the Inventory Shortage Means for Vehicle Leasing

As the automotive microchip shortage has caused vehicle inventory disruptions for auto dealers,  used-car availability is shrinking even more, shaking up car leasing with prices increasing at new levels. 

When leasing a vehicle, it typically equates to paying a lower monthly fee rather than financing the same purchase, however, the decreased inventory isn’t just minimizing incentives on purchasing a vehicle, but also raising lease prices. 

While many agree that leasing was considered a “no-brainer” for customers prior to the vehicle shortage, factors such as higher MSRPs, reduced incentives and increased rates, have caused the shift for more consumers to buy. Even though lease rates are rising with transaction prices, leasing companies aren’t pressured to leverage higher resale values to lower the monthly lease payment. 

Despite these challenges with the inventory shortage, leasing is still one of the best options for consumers, but it’s more important than ever now to have a plan if considering a vehicle lease in the near future. This plan includes comparing the cost on a lease to a traditional car loan and evaluating what the best option is in terms of total incentives and the overall total cost.

As 2022 continues, car lease marketplaces, like, will still see large increases in the number of leases getting bought out, in which it benefits both the auto dealer and the person listing the vehicle. Buyers at dealers will have access to more used vehicle inventory and more selection to choose from; and people listing vehicles from brands with unfavorable and outdated lease policies will have more success escaping their lease contracts.