PITTSBURGH (KDKA) – Here’s a pandemic aftershock that might seem surprising: There’s a growing shortage of new cars available.
The problem is computer chips!
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“Chips are the digital equivalent of screws. Cars need a lot of them, they’re not exactly sexy, but you can’t build a car without them, ”says Jeff Gilbert, CBS Automotive correspondent. “When the pandemic shut down, automakers withdrew to buy these chips. So the chip manufacturers sold the chips elsewhere. ”
There has been a great demand for these chips for computers, laptops, and telephones.
Then, when the dealers were allowed to reopen to their surprising demand for cars, it was hot.
“The used car business and part of the new car business is stimulated by people who want their own private space,” said # 1 Cochran owner Rob Cochran.
This means a way to socially distance yourself and get around.
They like to keep cars ready for 60 days in the 26 Cochran dealerships with 18 different brands.
“Instead of this 60-day optimum, we are now on offer in the 40s, 43, 44 days. The population density will likely become even tighter in the next 30 to 60 days, ”says Cochran.
While Cochran expects the situation to improve in midsummer, Gilbert says, “It will be until next year or until a dealer’s inventory is back where it should be.”
Timing couldn’t be worse for traders like Cochran, who says they were allowed to reopen last summer.
“Almost every month sales have exceeded our expectations,” he says.
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Gilbert says the semiconductor industry is trying, “But they just can’t make enough chips to please the auto industry, so the automakers can’t make enough cars to please the dealers.”
Cochran says some brands like Kia, Hyundai, Nissan, VW, Buick and others are hanging there, but …
“Domestic inventory, especially of trucks and SUVs, has been questioned and they are wrestling with it,” he explains.
“Every vehicle uses a lot of these chips, your heating and air conditioning is computer controlled, many of the systems in the car that economically deliver fuel are computer controlled, all of which use chips,” says Gilbert. “So you can see that an automaker is driving. Okay, I can’t make a lot of money on this vehicle, so I’m going to move the chips to a vehicle that I can make more money on.”
In other situations, Gilbert says, “They make some vehicles, maybe with just enough chips to make them but not enough for the heating and air conditioning, so they make them and park them until more chips come in. ”
Ford is the only manufacturer talking about the implications of all of this, and Gilbert says.
“So far, there are around two and a half million vehicles in production, and we are currently bottoming out,” he says.
According to Cochran, the slow flow of new cars is accelerating the used car market.
“Quite a strange time, and we’ve really never seen anything like it in the US market,” says Cochran.
Dealers actively look for used vehicles, including buying them, and encourage tenants to redeem their leases early.
“With the strength of the used car market, now is a good time to buy,” says Cochran.
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Keep in mind, however, when looking for a new car the choices may be a little more limited than expected.