Automakers have their hands full. In the last year the automotive industry has seen reduced inventory, price increases and production delays due to the ongoing semiconductor chip shortage. Big changes are coming for products and plants. The industry is in the midst of a big push toward widespread electrification and a zero emissions future.

The belief is that auto volumes will grow in 2022 as the industry gradually works through supply chain headwinds and ramps up production as much as possible to reduce backlogs, satisfy pent-up demand and rebuild inventories. Electrification should gear up and the related challenges are an important driver, shaping strategies and directing investment.

BEST TECHNOLOGY IN 2022

When it comes to today’s SUVs, cars, trucks, and minivans, electronic tech features are hugely important. These items are now an integral part of how you interact with your vehicle, as well as how your vehicle interacts with the cars around it on the road. They range from safety and security measures to communication and connectivity features.

Loan limits for conforming loans acquired by Fannie Mae and Freddie Mac, which are reset annually, increased this year.

1. ADVANCED DRIVE ASSISTANCE SYSTEMS

This is a category of systems that can ensure that you know when a vehicle is in your blind spot, can keep you a safe distance from the car in front of you, and can keep your vehicle from drifting into another lane. One of the first examples of an Advanced Driver Assistance System (ADAS) was anti-lock brakes. These are now standard equipment on every new car. In modern vehicles, there are now dozens of these systems.

These advanced driver assist systems often come in bundled safety suites. Some examples are Toyota Safety Sense, Subaru EyeSight, Ford CoPilot360, Honda Sensing, and Nissan Safety Shield 360. Even if a model you are shopping for doesn’t have ADAS as a bundle or suite of features, many automakers sell them as standalone options or include them as part of a specific trim level.

Key Features to Look For:

Adaptive Cruise Control: In some ways, adaptive control is similar to regular cruise control. However, while adaptive cruise control also keeps your vehicle at a set speed, additionally it slows down or accelerates to keep a safe distance from the car in front of you.

Blind-Spot Alert: This uses sensors on the vehicle to detect if there is a vehicle in your blind spot. It signals that there’s a vehicle there with an alert on your side mirrors. Some pickup trucks also have a blind-spot alert that takes into account vehicles that are next to either side of your trailer while you tow.

Cross-Traffic Alerts: If you are trying to back out of a parking space and you can’t see around the vehicles on either side, rear cross-traffic alert will let you know if a vehicle is approaching. This system often uses radar units on the vehicle to detect cross traffic. In some cases, you’ll hear an alert and see arrows on the center screen that show from which direction the other car is coming. Front cross-traffic alert is especially handy when you’re exiting a blind alley or driveway. Some newer systems also prevent you from turning left across traffic if it senses a vehicle is in your path.

Forward Collision Warning/Avoidance: Forward collision warning (FCW) senses if you are at risk of a potential collision with the vehicle ahead of you. Some systems can sense if there is a pending collision a few vehicles ahead. FCW can make sounds, flash display lights, or provide a tactile change to the way the steering wheel or brake pedal feels. Forward collision avoidance uses the FCW sensors and, if the driver doesn’t react quickly enough, adds automatic emergency braking to stop the vehicle.

Lane-Departure Warning: This feature will alert you if your vehicle starts drifting into another lane.

Lane-Keep Assist: If your vehicle does start to drift into another lane, lane-keep assist uses steering to keep your car in the lane. If your vehicle drifts into oncoming traffic, some systems will also use steering to get back onto the correct side of the road.

Reverse Brake Assist: If this system senses an object behind your vehicle while backing up, reverse brake assist can use automatic emergency braking to stop your car, avoiding a collision.

2. AUTOMATIC EMERGENCY BRAKING

As you can see from the examples above, automatic emergency braking is an essential part of safety tech. When the car senses that a collision is imminent, AEB activates your car’s brakes, potentially avoiding or minimizing an accident. AEB can react faster than a person and can start working before you hit the brakes. If you are braking and it senses you need to stop sooner, AEB can also brake harder than the pressure you’re applying. While AEB is part of many advanced driver assist systems, this is an essential system that may be a standalone feature, and it should be considered a high priority. According to the National Highway Traffic Safety Administration (NHTSA), automakers are part of a voluntary effort to have AEB plus forward collision warning in nearly all new passenger vehicles by August 31, 2023. Several automakers already have these systems as standard equipment.

3. CONNECTED MOBILE APPS/DIGITAL KEYS

Cell phones are a huge part of our lives. Some automakers understand how important our phones are to us — so why not make cell phones an easy way to use your car’s features? Almost every car company has an app you can download for your car. Some are better than others, but the most advanced ones let you remotely lock and unlock the doors, check the status of fuel level and tire pressure, and even remotely start the car – which is especially nice on a cold winter’s morning.

These apps can also display key maintenance features, such as how much gas you have left, or range in an EV. You can also use these apps to find the nearest dealership, gas station, or charge station. You can even use some of these apps to set up scheduled maintenance.

The digital key has extra security measures built in that tie only your phone to your car. With it, you can hold the smartphone near the door to lock and unlock your car. You can even drive the car with just the phone. It uses several levels of security to ensure that only you – and people you give specific permission to – can get into and drive your car.

Make sure to ask if there is a monthly or yearly subscription fee for the service, as it can vary from carmaker to carmaker.

4. TEEN DRIVER TECH

This is a bundle of tech features that are aimed squarely at parents with younger drivers in the house. The best known of these is GM’s Teen Driver suite of features, which is available on some Chevrolet, GMC, Buick, and Cadillac cars, trucks, and SUVs. Teen Driver serves as a safeguard for new drivers, putting parents’ minds at ease when handing over the key fob. The system can notify you if the car is driven over a certain speed, disable the audio if seatbelts aren’t in use, filter out explicit content (if your car comes with SiriusXM satellite radio), and can set a volume limit on the sound system. There’s even a report card that will tell parents if safety systems like ABS or forward collision alert have been triggered while your kid was behind the wheel.

In addition, most Ford and Lincoln models have the MyKey system. Around for more than 10 years, MyKey allows the parent to configure specific settings in the key (remote fob) for a younger driver. You can program that fob to limit the vehicle’s top speed, keep traction control on at all times, keep 911 assist activated, control maximum volume for the audio, and set up a do not disturb for smartphones. It can also keep the stereo off until both the driver and front passenger have their seatbelts on. Another handy feature is that MyKey can give your teen driver an earlier warning about low fuel.

Hyundai’s Bluelink system allows parents to set up preferences for younger drivers in the house. There’s a curfew alert, car finder, geofence alert, and a speed alert. There’s also a monthly vehicle health report and you can set preferences for vehicle maintenance.

5. SAFE EXIT ASSIST

Riding a bike is a constant challenge in the city. Riders have to be as concerned with parked cars as they are with moving vehicles. A feature that helps riders and drivers alike is the exit warning. The alert uses rear-looking sensors to detect approaching bicycles and traffic. That ensures that a passenger doesn’t open a car door just as a cyclist comes by.

These systems also work when a car is approaching. If you are parked along a street and your passenger wants to get out of the car, those same sensors can help prevent someone from opening the door as traffic drives by.

Exit warning systems work for several minutes after the engine is shut off. If the sensors see an approaching bicyclist or vehicle, they alert the passenger with a series of bright lights. The most advanced systems will physically lock the door by activating the child safety lock to prevent it from being swung open into the path of the approaching object.

6. WIRELESS SMARTPHONE CONNECTIVITY AND CHARGING

Wireless smartphone connectivity and/or charging is a great way to declutter the area around the transmission shifter. Because wireless charging uses a charging pad, that spot in the vehicle serves as a handy storage area for your phone. We recommend looking for a vehicle in your price range that offers both wireless connectivity and charging.

7. 360 DEGREE CAMERA

This is a very popular feature that’s becoming easy to find in new cars of all price ranges. A 360-degree camera is incredibly convenient and easy to use and helps reduce damage to your car.

By combining cameras on every side of the car with some clever tech, your car’s display can show a virtual top-down view of your surroundings. It can show the sides of your garage or whether you’re between the parking lines at the grocery store. It can also provide invaluable assistance while parallel parking.

While reverse brake assist and cross-traffic alert help to avoid collisions when backing out of a parking space or driveway, a 360-degree camera can make sure you don’t hit anything while you’re parking. Not only can this keep your car scratch- and dent-free, but it can reduce insurance claims from low-speed crashes. This camera is a great help when parking a large vehicle.

8. EMERGENCY SERVICES/STOLEN VEHICLE TRACKING SOFTWARE

More than 810,000 motor vehicles were stolen in 2020. That’s a shocking number, and it stresses the importance of having built-in vehicle tracking technology. If your car, truck, or SUV is equipped with one of these systems, it makes it a lot easier for law enforcement to find your vehicle – and they can find it faster, potentially reducing damage to your car. For example, OnStar can remotely slow down a stolen vehicle and can keep it from being restarted once it’s shut off.

Stolen vehicle tracking technology is part of the assistance and security systems such as Subaru Starlink, Kia UVO, Hyundai Blue Link, and GM OnStar. Several automakers offer this feature.

But it doesn’t just help if your car is stolen. These systems can also help get rescue services to you after a crash has happened by pinpointing a vehicle’s exact location. That same location information can be used to find someone during a national disaster, to find an aging family member who may need help, or to make sure your teen driver is safe.

9. BLIND-SPOT VIEW MONITOR

Sometimes it’s really nice to have an easy-to-view screen that shows what’s on either side of your car when changing lanes. This is where a blind-spot monitor comes in handy. It uses a small camera on either side of your car to display what traffic may be in the lane next to you. This can help prevent you from hitting another car or a person on a bicycle or motorcycle. There are different versions of this technology, but we prefer easy-to-see displays within the gauge cluster, such as in Genesis, Kia, and Hyundai vehicles.

10. VIDEO REARVIEW MIRROR

If you’ve ever been to a big-box store and filled your SUV to the roof with supplies, you know what it’s like to lose use of your rearview mirror. However, a video rearview mirror solves this problem. It uses a rear-mounted camera that displays the view behind your vehicle. This type of rearview mirror is in the same spot as the traditional version, but you can toggle between the regular and the video view. This type of mirror is also helpful when towing, because it gives you a wider view of the road while allowing you to keep an eye on your trailer.

CAR CHIP SHORTAGE UPDATE

Auto chip shortage has had a profound impact on the ability to buy a car. Supply chain problems have forced automakers to stop or limit the production of new cars, trucks, and SUVs. Together with disruptions due to the coronavirus pandemic, the price you pay and the deal you get could be very different from what you expect.

WHY IS THERE A CHIP SHORTAGE AND WHEN WILL IT END?

Auto manufacturers canceled semiconductor orders in the early stages of the coronavirus pandemic. Once the economy started to rapidly improve, getting access to those materials proved exceedingly difficult because they were already allocated to consumer electronics by chip suppliers.

Analysts predict inventory may not return to pre-pandemic levels until 2023. Many chip suppliers are located overseas, and it hasn't been easy for the U.S. to build more semiconductors domestically. While there are efforts by the government to get this to happen, it will take time.

On January 25th, the U.S. Commerce Department reported that median inventory for chips had fallen to just a 5 days' supply, compared to 40 days before the pandemic. Semiconductor companies don't expect the situation to go away within the next 6 months.

On February 4th, the House of Representatives passed the "America Competes Act of 2022" with $52 billion to subsidize chip manufacture and research and $45 billion to help ease supply chain problems. The bill will need to be approved in the Senate before it can be signed into law.

Some manufacturers have taken the opportunity to make big changes. For example, Ford is limiting the number of vehicle configurations stocked by dealers by up to 80%, which may get more buyers to place an order. Honda is looking to normalize lower inventory levels to reduce overhead and increase profit for its dealers.

WHAT DOES THE CHIP SHORTAGE MEAN?

With the inventory shortage making it harder to find vehicles, new car prices remain high and buyers have less negotiating power than in the past. While there can be ways to avoid a dealer markup, some buyers have resorted to ordering cars in transit or even delaying their purchase.

Dealers may be selling fewer cars, but are also seeing record profits. A shortage of new cars also boosted demand for preowned vehicles. This caused used car prices to rise by over 40%, creating opportunities for some buyers to benefit from high trade-in values. Some brands began limiting lease buyout options as a result.

Without required semiconductors, automakers have been unable to complete the manufacturing of their cars. For example, GM limited the availability of its Super Cruise driver assistance technology and even began selling incomplete vehicles with a number of missing features that would've been standard equipment.

In the above photo taken of a 2022 Chevy Tahoe High Country window sticker, you can see the automaker is crediting buyers a total of $100 because the $80,000 SUV wasn't built with an engine with automatic stop/start and lacks a steering column lock. The lack of stop/start could hurt a driver's fuel economy for years.

Here are some other noteworthy examples of how the chip shortage has impacted cars:

Toyota Tacomas started coming with only one keyless remote
Ford Mustang Mach-E orders were delayed
2022 Buick Encore dropped its entry-level 1.2L engine
Ford shipped thousands of F-150s with missing chips
Ford began offering to remove stop-start on F-150s
GM paused making Silverado engines with cylinder deactivation
Toyota stopped advertising lease incentives in some regions

WHAT ARE CAR PRICES LIKE DURING THE SHIP SHORTAGE?

Based on data from Kelley Blue Book, new car buyers have been paying over MSRP for over 6 straight months. While the figure does not factor in manufacturer rebate deals, it does indicate that new car buyers should expect to pay MSRP or more until conditions improve.

The average transaction price of a new car in December 2021 was over $47,000. New vehicle prices were already trending higher due to a shift toward SUVs and expensive trucks, but the chip shortage has only made things worse. While there are still cheap cars you can buy in 2022, there are definitely fewer choices.

Paying MSRP could make sense if you aren't able to wait. After all, real-world car prices are dictated by supply & demand. Although manufacturer incentives are down overall, there can still be opportunities to save whether it's with great leasing deals or available 0% financing promotions amid the inventory shortage.

In the preowned market, the average used car price in December 2021 exceeded $28,000 for the first time ever based on data from Cox Automotive. Used cars under $10,000 have been the hardest to find. While CPO cars can be a good deal for some buyers, they are generally more expensive than non-certified cars.

WHAT CARS ARE THE HARDEST/EASIEST TO FIND DURING THE CHIP SHORTAGE?

Import brands are the hardest to find. According to Cox Automotive, Kia and Honda tied late last year with the worst inventory at a 17 days' supply. The industry average was 33 days. Toyota and Subaru weren't far behind with a 19 and 20 days' supply, respectively.

Having said that, brands with higher days' supply numbers may not always be easier to find. For example, GM has more inventory than Toyota, but trucks like the GMC Sierra are offered in many different configurations. As a result, getting the exact truck you want could require you to wait or place an order with a dealer.

Based on days' supply, Chrysler had the most inventory at 98 days based on data from late last year. However, given the fact that the brand sells just two main models at this point — the Chrysler 300 and Pacifica minivan — these may not be so easy to find.

CAR PRICES IN 2022

2021 was an unusual year for the automotive industry. While customer demand for new cars rebounded from the economic uncertainty of 2020, automakers found themselves unable to meet that demand because of semiconductor chip shortages and supply chain problems, and prices for both new and used cars skyrocketed.

So what should car shoppers expect for 2022? Much of the same, unfortunately.

Along with shortages and supply chain issues, drivers also have inflation to thank for continued price hikes for cars in 2022. Overall consumer inflation soared 7% in 2021, the biggest increase in nearly 40 years, the Labor Department said on Wednesday. Used car and truck prices, a main driver of the surge, shot up 37% last year, with the average used vehicle now costing $29,000, according to Edmunds.

Shoppers today must contend with a limited selection, dealership markups, little to no discounts, and a greater sense of urgency to move quickly on a deal. With this in mind, here are six ways that car buying has changed, along with a few tips on how to manage it.

VEHICLE SHORTAGES MEAN HIGHER PRICES

Vehicles that make their way onto the lot are more likely to be in more expensive trims and either marked-up in price or with numerous dealer-installed accessories that achieve the same effect. And if that wasn't enough to contend with, you'll find that dealerships are much less likely to come down on price since they know there aren't many other options available. It's a textbook case of supply and demand.

These days, paying MSRP (or Manufacturer's Suggested Retail Price) might actually be a "good deal," relatively speaking, Edmunds reported.

Tip: Casting your net out farther to increase your options. Not every dealership is marking up vehicles. If you see one you like, be prepared to move quickly because it may not be there the next time.

YOU’RE MORE LIKELY TO ORDER YOUR NEXT CAR

One way to avoid the markups and dealer add-ons is to order the vehicle from the manufacturer. This ensures that you get exactly the color and options you want, provided you're willing to wait roughly six to eight weeks.

The basic idea is that ordering a vehicle saves the dealership on lot fees and insurance for vehicles parked on- or off-site, and it can then pass the savings on to the consumer. The "savings" these days is paying MSRP and not being charged for dealer add-ons or the convenience of having a vehicle right away.

Tip: The easiest way to order a vehicle is to use an automaker's website to build the vehicle configuration you want and then send that information to your preferred dealership.

LEASING WILL BE LESS ENTICING

Edmunds analysts said leasing is becoming less popular for a couple of reasons. As inventories remain low and the cars that are in stock tend to be more loaded with options, they're less likely to be targeted by automakers' leasing programs because these vehicles typically suffer higher depreciation than their mid- to lower-level-trim counterparts.

Tip: You might need to do some extra planning and research before your lease ends to find affordable options, Drury said. You can also consider buying out your lease, as it will likely be a better deal since the selling price for it was calculated years before the market took a turn.

USED VEHICLES MAY NOT OFFER RELIEF

Many new-vehicle shoppers turned to the used market for a better selection or respite from the higher new car prices. But this, in turn, caused its own shortage and record-high prices. Edmunds analysts predict that in the coming year, the average used vehicle price will surpass the $30,000 mark for the first time. Prices for 1-to-3-year-old vehicles will also often approach or exceed the price of what they would cost brand-new. Bonkers, right?

Tip: If you have your heart set on used, it's worth taking a look at certified pre-owned vehicles. They may be pricier than other used vehicles, but they come with a warranty, are often in better condition, and you're more likely to get a subsidized interest rate, Drury said. Finally, trade-in values are very strong now, which can help offset the higher pricing.

DEALERSHIPS WILL BE MORE OPEN TO HOME DELIVERIES

Having a vehicle delivered to your home was something of a "secret menu" item in past years, reserved for VIP clients or those in the know. But after the COVID-19 pandemic forced the shutdown of countless dealership showrooms, home deliveries and the subsequent paperwork became almost a necessity. It will vary by location and brand, but your chances of wrapping up a car deal at home are significantly better than before.

Tip: Make sure to ask for a home delivery when making a deal on a car. Filling out any finance paperwork beforehand will greatly speed up the process.

WHAT’S NEW WITH ELECTRIC VEHICLES
FOR 2022

Sales of cars powered solely by batteries surged in the United States, Europe and China last year, while deliveries of fossil fuel vehicles were stagnant. Demand for electric cars is so strong that manufacturers are requiring buyers to put down deposits months in advance. And some models are effectively sold out for the next two years.

Battery-powered cars are having a breakthrough moment and will enter the mainstream this year as automakers begin selling electric versions of one of Americans’ favorite vehicle type: pickup trucks. Their arrival represents the biggest upheaval in the auto industry since Henry Ford introduced the Model T in 1908 and could have far-reaching consequences for factory workers, businesses and the environment. Tailpipe emissions are among the largest contributors to climate change.

While electric vehicles still account for a small slice of the market — nearly 9 percent of the new cars sold last year worldwide were electric, up from 2.5 percent in 2019, according to the International Energy Agency — their rapid growth could make 2022 the year when the march of battery-powered cars became unstoppable, erasing any doubt that the internal combustion engine is lurching toward obsolescence.

The increase of electric cars will improve air quality and help slow global warming. The air in Southern California is already a bit cleaner thanks to the popularity of electric vehicles there.

The auto industry is on track to invest half a trillion dollars in the next five years to make the transition to electric vehicles. That money will be spent to refit and build factories, train workers, write software, upgrade dealerships and more. Companies are planning more than a dozen new electric car and battery factories just in the United States.

But not everyone will benefit. Makers of mufflers, fuel injection systems and other parts could go out of business, leaving many workers jobless. Nearly three million Americans make, sell and service cars and auto parts, and industry experts say producing electric cars will require fewer workers because the cars have fewer components.

Over time, battery ingredients like lithium, nickel and cobalt could become more sought after than oil. Prices for these materials are already skyrocketing, which could limit sales in the short term by driving up the cost of electric cars. The transition could also be limited by the lack of places to plug in electric cars, which has made the vehicles less appealing to people who drive long distances or apartment residents who can’t charge at home. There are fewer than 50,000 public charging stations in the United States. The infrastructure bill that Congress passed in November includes $7.5 billion for 500,000 new chargers, although experts say even that number is too small.

And it could take time to see the climate benefits of electric cars: Replacing the 250 million existing fossil-fuel cars and light trucks could take decades unless governments provide larger incentives to car buyers. Cleaning up heavy trucks, one of the biggest sources of greenhouse gas emissions, could be even harder.

Still, the electric car boom is already reshaping the auto industry.

Most analysts figured that electric vehicles wouldn’t take off until they became as inexpensive to buy as gasoline models — a milestone that is still a few years away for moderately priced cars that most people can afford.

But as extreme weather makes the catastrophic effects of climate change more tangible, and word gets around that electric cars are easy to maintain, cheap to refuel and fun to drive, affluent buyers are increasingly going electric.

Ford will soon start selling the Lightning, an electric version of the F-150 pickup truck, which has topped U.S. sales charts for decades. It initially planned to make 75,000 a year. But demand has been so strong that the company is racing to double production of the Lightning, which starts at $40,000 and runs up to more than $90,000. Ford stopped taking reservations after amassing 200,000.

A growing selection of electric pickups and sport utility vehicles is attracting buyers uninterested in Tesla’s minimalist cars, which are most popular in coastal cities and suburbs.

At the upper end, electric vehicles are already competitive on price and could save buyers thousands on maintenance and gasoline. (Electric cars do not need oil changes, and electricity is generally cheaper per mile than gasoline.)

If Europe and China are any measure, sales of electric vehicles in the United States will continue to explode. In December, battery-powered cars outsold diesel cars in Europe for the first time. In 18 countries, including Britain, more than 20 percent of new cars were electric, according to Matthias Schmidt, an independent analyst in Berlin.

In 2015, more than half of Europe’s new cars ran on diesel, the result of tax policies that make diesel cheaper than gasoline. But government incentives for electric cars, and penalties for carmakers that don’t meet emissions targets, have changed the equation.

About 4 percent of new cars were electric last year in the United States, up from about 2 percent in 2020.

The point of electric cars is to cut tailpipe emissions, a leading source of carbon dioxide and the pollutants that cause of smog. In Southern California, electric cars have already had a small impact on air quality, leading to a 4 percent reduction in nitrogen oxide emissions from passenger cars compared with what they would have been otherwise, according to the South Coast Air Quality Management District, which includes Los Angeles.

Of course, battery-powered cars also have an environmental cost. But even taking into account the energy and raw materials they require, electric vehicles are much better for the climate than conventional cars, according to a Yale School of the Environment study.

Inevitably, a transition this momentous will cause dislocation. Most new battery and electric car factories planned by automakers are in Southern states like Georgia, Kentucky, North Carolina and Tennessee. Their gains could come at the expense of the Midwest, which would lose internal combustion production jobs.

That hasn’t happened yet, because gasoline vehicles still dominate sales. But as battery power takes market share, conventional models will benefit less from the cost savings that come from stamping out the same vehicle hundreds of thousands of times.

The next few years could be perilous for carmakers that have been slow to offer electric vehicles. Toyota, a pioneer in hybrid vehicles, will not offer a car powered solely by batteries until later this year. Ram does not plan to release a competitor to Ford’s Lightning until 2024.

The companies most endangered may be small machine shops in Michigan or Ontario that produce piston rings and other parts. At the moment, these businesses are busy because of pent-up demand for all vehicles.