The impact of COVID-19 on the auto industry: The Micro-chip shortage

#BeavertonCarGuy

Hello Loyal Beaverton readers.

Thanks to all of you who have written in or called, we love answering your questions.

Over the last few weeks, we have had many of our Beaverton residents ask about why there are so very few vehicles available, and why certain service operations are delayed?

Here are some interesting facts to help us all understand more about how the COVID19 has further caused issues that are not health related.

New Vehicles

New vehicle shopping has been a crazy rollercoaster ride since the COVID19 pandemic hit the US last spring, and buyers just do not understand how there cannot be any vehicles over a year later. I get phone calls seemingly every day from people wanting specific vehicles with specific options and I have to tell them the bad news. There has to be an understanding that, right now, we cannot be picky and for time being, we simply have to take what we can get. This means being flexible when it comes to things like options and color unless, of course, you special order a vehicle but in this case, delivered could be many months out.

What happened?

First, the global shut down occurred which meant stagnant inventory but no new deliveries. Then, when automakers went back to work, they reopened with less staff while the demand for new vehicles sky-rocketed. The new vehicle inventories at dealerships were snatched up faster than automakers could build them. Now, when manufacturers are finally fully operational and wanting to meet the new car demand, we have a global micro-chip shortage.

The Micro-chip shortage

These chips are primarily produced in China and it’s harder for the U.S. to get the chips in general. China shut down sooner and came back sooner, so they were able to get the chips domestically earlier than other parts of the world. Another car producing country that has access to chips is South Korea. So, what country with huge car market doesn’t have someone in their corner? The U.S. domestics.

When the first global shut down occurred, the chip manufacturers, not only closed first, but also reopened first. After the automakers had ceased production, they were not considering their contractual agreements with microchip manufacturers. When this occurred, the chip manufacturers began selling their microchips elsewhere, putting us exactly where we are today: a lack of microchips for our domestic auto industry. This is also true with some vehicle servicing as well as repairs that would require parts, many of which contain microchips.

I sure hope this information will be of use to all of our readers.

If you have comments or questions, please feel free to reach out to me: fergusonautobrokers@gmail.com. If Anyone needs help in purchasing a new or used vehicle of any kind or has an unused vehicle to sell, please let me know. Please feel free to check out our website at www.fergusonautobrokers.com