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Why a Shortage of Microchips Is Driving Up New and Used Car Prices – NBC4 Washington – Washington, District of Columbia

Washington, District of Columbia 2021-06-23 19:47:52 –

Steve Douglas has been selling vehicles for nearly 50 years and has never seen a dealer in Hancock, Maryland as empty as recently.

He said he usually sells 80-90 new and used cars, but now counts them in single digits.

“When you’re doing my job, it’s not a pretty sight,” he said, “and the sad part is how long it gets like this.”

Douglas is directly seeing the impact of a global microchip shortage, causing turmoil in new car production, which experts say could last until 2022.

Modern cars utilize these small computer chips to power everything from infotainment systems to special safety features and more. However, automakers have recently failed to get enough to meet all the demand for new vehicles, and some have delayed or canceled the production of certain models.

“When you get an order for a tip, you may need to keep your unfinished vehicle so that you can put it in and put it up for sale,” said Benjamin, Consumer Reports’ automotive industry manager. Preston says.

According to Preston, some automakers are “removing content,” meaning removing some of the non-essential features with chips, allowing more cars to go on sale. ..

“Automakers don’t have what they need and have to make concessions,” he said.

Experts explain that the problem began during a pandemic in which the car factory temporarily stopped production and canceled orders for microchips. At the same time, as more people work from home during the medical crisis, chip makers have seen a surge in demand for chips to supply personal electronics such as phones, laptops and game consoles.

When car production resumed, there weren’t enough chips to go around. Manufacturers are still digging into the backlog. And when you ask Douglas, it’s causing turmoil in the car buying market.

He said he was receiving a call from more than 100 miles away shortly after he listed the car on his website.

“They are panicking. They want a car and now they want it,” he said.

Preston and Douglas said the burden on new car production also affected and boosted used car sales. Some consumers who can’t buy a new car are looking for a used car instead. At the same time, others are holding an existing car. Otherwise, it will be traded in when you buy a new car.

Douglas explained that he often buys used cars from rental companies. Rental companies regularly replace their fleets with new models. However, rental companies keep their inventory longer as it becomes harder to get new cars. As a result, he buys and sells fewer used cars.

“They usually put 300-400 vehicles on the site every day,” Douglas mentioned of the car rental companies he often buys. “A week or two ago it had dropped to 25, but now it has dropped to zero.”

According to federal data from the Bureau of Labor Statistics, used car and truck prices rose by nearly 30% between May 2020 and May 2021, but Preston said some of them were used car prices at the start of the pandemic. He points out that it was due to the decline.

Still, he said it was a seller’s market, which is good news for used car owners who want to unload their car — if they don’t need a replacement.

Both Douglas and Preston said consumers should expect the problem to continue until 2022, as manufacturers are digging up the untreated portion.

“The analyst I’m talking to says …” Buckle up. It will come in at least next year, “Preston told News4. “Basically, we have to wait for the semiconductor industry to adapt to the big changes in this market, which will take time.”

Reported by Susan Hogan, produced by Katie Leslie, filmed and edited by Lance Ing, animated by Perkins Brotherd. Photographer Jeff Piper contributed to this report.

Why a Shortage of Microchips Is Driving Up New and Used Car Prices – NBC4 Washington Source link Why a Shortage of Microchips Is Driving Up New and Used Car Prices – NBC4 Washington

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