How the Automotive Microchip Shortage Affects Vehicle Inventory
If you’ve been vehicle shopping these past few months you may have noticed that dealerships, such as ours here at Davey Auto Sales, don’t have as much vehicle inventory as previous. As does the scarcity of a lot of products in today’s world, it all traces back to computer chip supply chain issues. Just like modern new vehicles require computer chips to work, so do thousands of other products, all competing for the same microprocessors. This has hampered new vehicle production, creating less new vehicles to sell at dealerships, and thus also increasing the demand for used vehicles in their place. All that adds up to suffering inventory, and leaving you with fewer choices than before, or having to wait extra long for your desired vehicle. Read on as we dive deeper into this microchip shortage and how it affects a dealership’s day-to-day operation.
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Fewer New Vehicles = Higher Used Vehicle Demand
Automakers were actually some of the initial predictors in the early stages of the COVID-19 pandemic that it’d have a long-ranging and long-lasting effect on the economy, and thus scaled back some production. Instead, though, consumer demand for vehicles remained high, and automakers had to work to catch up, along the way dealing with factory closures, reduced work staffs and this microchip shortage, which has made vital supplies in short order. While manufacturers struggled to meet the demand of new vehicles, this caused used vehicles to be incredibly valuable and popular, them being vehicles already produced. Eventually, though, even used vehicle inventory begins to see its own shortages, with fewer areas to procure them and with all dealerships in need, leaving dealerships like us to fortify our trade-in efforts from people like you. Now we’re in a position with lower inventory on both new and used vehicle sides, with still work to do to get back to our typical levels.
The Microchip Shortage has Worldwide Effects
While we’ve been in the COVID-19 pandemic and its wide-ranging economical effects for almost 2 years now, these issues still persist because microchips, worldwide shipping and mass production affect almost every business on earth. That means that the automotive industry can’t claim all of the available microchips and isn’t the top market for such chips, as the cell phone sector looms large over auto in need for such processors, and has many larger contracts guaranteeing them these mass amounts of chips. Automakers have responded by reserving as many chips as possible, prioritizing them into their biggest value vehicles. These are all stop-gap solutions at the time to be able to produce as much inventory now as possible, until a more consistent production schedule, and microchip supply is available.
When will the Microchip Shortage End?
Now to the ultimate questions that you’ve surely been wondering, when is this all going to end? As we still sit in the midst of the COVID-19 pandemic that seems to ebb and flow, while worldwide production of various goods has been recovering (or at least doing well to adapt to the new economic way of the world), even conservative estimates still have the resolution of the supply chain issues years away. New microchip plants are being built overseas to help increase production, but those are still years away themselves to help aid the process. As the decades have shown, the automotive industry is one of the most versatile and flexible in the world, and will no doubt continue to still find ways to respond in the face of adversity.
While it may not be as bountiful as previous, we still have an extensive inventory of used vehicles, including cars, trucks, SUVs, vans and more. If you have a vehicle you’d like to trade-in, we’d love to buy it off you, so contact us, today, to get started now.