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THE DEALERON BLOG

New Car Inventory Shortage Extended

chip-shortage-extended
chip-shortage-extended

What’s with the lack of new car inventory? We’ve got the scoop on the ongoing shortage of new car inventory.

chip-shortage-extended

I don’t have to tell you that there are no cars out there. You can look out the windows of your store and see the mostly-empty lots for yourself. In this space, I talked a bit about the superconductor shortage that was the original culprit and expressed optimism that the situation might be turning around. I might have been a little too sunny in my outlook.

First, a quick refresher. Modern cars need a ton of computer chips, also called superconductors. When the pandemic hit, the factories that made these chips had to shut down. For a locked-in population, demand shifted from cars to computers (and tablets, and game consoles, and you get the idea). Automotive production fell like a stone. Then a couple of large storms and a fire devastated the supply chain.

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The current shortage owes more to the delta variant. The supply chain was beginning to recover when delta hit, running rampant through an unvaccinated population in the Asian countries, such as Malaysia, where the chips are made. This is not a permanent state: as more workers can be vaccinated, chip production should return to normal.

It’s important to point out that the problem is no longer merely superconductors. Other necessary components, such as wiring harnesses, plastics, and glass, are also being hit. Same reasons as the other. So how long will this shortage last? That’s the bad news. It takes about a year of optimal conditions to get that 60-day buffer of inventory that will bring new vehicle prices down out of the stratosphere. With the average car up almost $8200 over two years ago, most consumers just can’t afford to buy that new car and that’s bad news for all of us.


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Author Justin Robinson-Prickett

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