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Computer chip shortage leaving local car dealerships with little inventory

McCarthy's
Posted at 5:48 PM, May 07, 2021

If you’re looking to buy a new or used car this year, it may be a little tougher than usual due to a severe shortage of computer chips.

The auto industry is suffering a computer chip shortage and for cars, these chips control everything from braking to steering and engine management.

“The chips are being manufactured overseas and with shipping problems and COVID, they’re just not being brought to the U.S.,” said McCarthy’s General Manager Chris Wesney.

The demand for new cars is outpacing the supply, so the chip shortage is forcing people into the used car market. Prices for used cars are going up like never before.

“I’ve done this over 30 years. I have never seen the prices like they are in used cars. Cars are going up 7, 8-thousand dollars in value over a 30-day period,” said Mike Cummings, Cole Chrysler Dodge Jeep Sales Manager.

“Typically, a new car store might carry a mix of 80% new, 20% used. Now they’re having to change that mix to 50 sometimes 60% used,” said Tribe Auto Owner Marcus Haidet. “That puts pressure on us little guys to be able to compete at a dollar level we didn’t have to compete for before.”

Now, car dealerships are paying premium prices for used cars.

“We’re buying cars from customers off the street. That way, we can get them a really good deal. We don’t care if they’re trading it in or not,” Cummings said.

“We’re doing everything we can to keep the inventory the same, but it’s a struggle every day," he added. “It used to be that it was easy to get cars, hard to sell cars. Now it’s the opposite.”

As a solution for the shortage, the U.S. Senate proposed the Chips for America Act which would provide financial incentives for chip manufacturers to increase their production in the U.S. Funding for the act may be finalized later this month.

“I think that anything we can do to manufacture supplies in the United States is going to benefit the country,” Wesney said.

Car dealership managers also advise buyers to act soon. They warn that car prices will only get higher as COVID-19 restrictions alleviate.

Consumer Reports also says if you have a used car, now is a good time to sell it. The average price is up 12.5 percent from last year.