It's the year 2022 and we've run out of paper.
The automotive industry has been facing numerous challenges in the past few years, including a severe semiconductor chip shortage, a lack of raw materials used in the construction of EV batteries, and even a looming glass shortage, but no one could ever have guessed that a paper shortage would be the next big industry crisis.
According to the Wall Street Journal, the US is experiencing a shortage of title paper, which, without, car owners can't prove ownership. Those who've bought a car before will understand that the seller of a vehicle needs to hand over a title (physical proof of ownership) to the buyer, and this title is also required when registering a car in your name.
The problem is that this is no ordinary piece of paper: it features numerous security measures to prevent counterfeiting, and now we're running out of it.
The Wall Street Journal recently spoke with industry experts to get to the bottom of the shortage, and their answers led to some interesting insights. "It's one of these things that's like everybody's touched it probably at some point, but you don't realize the complexity that actually goes behind it," says Andrew Palmer, director of sales for labels and forms at R.R. Donnelley & Sons Co., one of the largest printers of title paper.
According to the Journal, how we consume paper has changed since the pandemic. A significant increase in home deliveries has resulted in more cardboard boxes. Couple that with low demand for niche securitized paper due to fewer sales, and you have the perfect storm.
Luckily state officials and dealerships have figured out workarounds to ease the backlog of car titles.
Some dealerships have now begun issuing power of attorney agreements that allow the dealer to sign the title once it is available. In states like Michigan, South Dakota, and Oklahoma, officials have started to conserve the supply of paper and prioritize buyers who require a title to sell a vehicle. Dealerships are also being asked to delay title requests until vehicle purchases are finalized.
According to Robin Shrake, a county treasurer in South Dakota, the state's department of revenue has concluded that the shortage would continue well into next year.
The good news is that this shortage could increase the use of electronic titles, which are already in use in states like California and Texas. Electronic titles might not have the same nostalgic feel as receiving a hard copy, but at least you'll know where to find it when you flip your new 2023 Ford Mustang after a few months.