Can someone succinctly explain “this crazy leasing and used car market”?

[jeisensc]

Take the 20 minutes and listen to

Shortages Affecting Auto Production: Semiconductor, foam, etc

This is the most precise/concise synopsis of: chip shortage 2020-present (synopsis with update on production) with information about that industry’s expected expansion and investment autos specifically, including Japan and update on exogenous events update on the broader electronics market, inflation, pull-forwards If you read/watch/listen to 1 thing about Shortages, pick this 19 mins (2 min at the end is a horribly long securities disclaimer)

Most of it boils down to supply/demand, but too succinct falls apart on further examination:

@Tf92658

There is a worldwide shortage of microchips and that has decimated production of new vehicles. It has driven used car prices to enormous heights and new cars often sell for MSRP or over.

Chip shortages (mostly due to ordering for 2021 in 2020 based on early covid demand drop) is a proximate cause of new car shortages and price levels, but not most of the used car shortages or inflation (lack of lease returns, rental car companies dumping inventory in early 2020 then revenge buying in early 2021, some substitute-buying by new car purchasers, the Carvanas and Vrooms of the world 2x-3x their balance sheets with inventory, auction prices riding to the ceiling and then bouncing).

The shortages are with us until inventory and production can meet demand: we have seen some signals that used car inventory is getting there (high demand model shortages continue), for new cars I wouldn’t expect any deals that resemble 2019 before 2022.