Buyers, dealerships impacted by computer chip shortage

Michigan

GRAND RAPIDS, Mich. (WOOD) — Anyone in the market for a new car may find it’s slim pickings at dealerships — yet another side effect of the global semiconductor shortage.

The coronavirus pandemic helped create the shortage that at first disrupted automotive manufactures but has now caught up to consumers as well.

“I’ve been covering this industry for 25 years and I haven’t seen anything quite like this,” auto analyst Mike Wall with IHS Markit said.

The computerized chips are a crucial component in vehicles, as well as consumer electronics like your phone, gaming systems and more.

“We’re fighting for every chip,” Wall said. “To give you a frame of reference, an average vehicle can have anywhere from a thousand to 1,400 semiconductors in it.”

As a result of the shortage, automakers have had to cut production, leaving dealerships desperate for inventory.

“Drive down 28th Street as an example and go to your nearest dealership and it’s pretty slim pickings over there right now in terms of vehicles on lots,” Wall said.

The limited selection of new vehicles has driven up demand in the used-car market as well.

“We’re seeing some folks moving to the used-car market,” Wall said. “Inventories are very tight in the used-car market too and prices are going up.”

Wall said it’s a strange marketplace that’s most favorable for those looking to trade in their vehicle as dealerships are willing to pay top dollar for a used ride.

“If you’ve got a used vehicle in reasonably good condition, with reasonable miles, or even not reasonable miles at this point, you’re going to get top dollar for your vehicle,” Wall said.

While the trade-in may be easy, finding a replacement vehicle will prove more difficult.

“The classic used-vehicle seller is in a very good position to get a good price, the one challenge is then trying to get that next vehicle if you are still in the market,” Wall said.

Auto analysts anticipate this shortage will last through the end of the year.

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