Auto-buying woes: Shortage of tiny chips causing big problems

Car buyers who dream of owning the new or pre-owned car of their dreams should order now, in some cases prepare to settle for what’s available and know that newer model, pre-owned vehicle prices are up due to increased demand.

The chip shortage put the brakes on the usual car inventory. It’s a global problem not impacted by hurricanes or other weather events here in Southwest Louisiana, although dealers lost vehicles and are having to navigate with insurance providers. Toyota was better prepared for the chip shortage after learning a valuable lesson in 2011 when an earthquake and tsunami impacted its supply.

 Tiny computer chips power communication, entertainment, emissions and sometimes safety features of today’s automobiles. The COVID-19 pandemic caused disruption of supply chains and manufacturing the world over due to personnel shortages and closures due to the pandemic.

A New Scientist online article said the computer chip shortage is because of a “perfect storm” of problems. Car manufacturers cut production following the initial slump in car sales because fewer people were traveling during the pandemic shut down. More people started working at home and needed computers, which use the chips. The ice storm in Texas impacted chip factories here at home in the United States. Tokoyo had a fire at one of its plants. Taiwan’s drought impacted production there as large amounts of water are needed in production of these devices.

“Sometimes they’re having to leave unfinished vehicles stored so that when the orders for chips come in, they can put the chips in and send them out for sale,” Benjamin Preston reported in an NBC online report.

“It’s affected not only the car industry, but the electronics industry in general,” said Jeremy Soileau, Bolton Ford general manager.

A smaller car inventory has driven up the demand, and thus the pricing of pre-owned vehicles.

“For several months, pre-owned vehicles were bringing in more than vehicles purchased new,” Soileau said.

He gave the example of a pre-owned F-150 selling for $60,000, more than the MRSP of $57,000.

Every vehicle is in short supply. However, the truck market is slightly worse. The high demand here could be influenced by the number of contractors working here to help Southwest Louisiana recover.

“It’s changing the market,” Soileau said, “a person no longer can pull up the book value to determine the value of his trade-in or choice in a pre-owned truck. We’re having to use the most recent market analysis tools.”

Corey Tarver said, “Practically every used car less than two years old is selling for pretty close to the sticker price of a comparable new vehicle right now.”

“No one could have foreseen the effects COVID has had on the supply chain,” Tarver said. “Toyota has done a better job than most manufacturers in maintaining enough supply of the chips to continue production. We are getting hundreds of vehicles every month.”

Tarver said most buyers who are specific about what they want are waiting from a week to a month for their new car to come in at Lake Charles Toyota.

Soileau said the wait at Bolton Ford was at three to four weeks for new truck delivery and that time span has improved this month.

“Every new truck we receive off the transport is pre-sold or sold as soon as it hits the lot,” he said.

“The increase in price of used cars isn’t something to be afraid of if you have a trade-in or an insurance settlement on a totaled vehicle,” Tarver said. “Your trade-in or your insurance settlement will be inflated similarly. Now is the perfect time to come to talk to us about the vehicle you’re interested in.”

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