Across the country, car dealerships are struggling to keep up with demand and consumers are noticing less new cars when they get to lots. The culprit? Semiconductor chips. So what are semiconductor chips, why are they low in stock, and why is it impacting shopping for a new vehicle?
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What to know about the chip shortage and how it impacts your Anderson CDJR dealer
Semiconductor chips are made from silicon and allow electronics like smartphones, computers, and other electrical devices like video game consoles, e-readers, and TVs to work. Vehicles also use these chips. Raw materials for the semiconductor chips usually come from Japan and Mexico and then are assembled in China and the US.
Why is there a shortage?
The COVID-19 pandemic drastically increased demand for personal electronics like cell phones and laptops and demand for these items surpassed production speeds. When pandemic lockdowns began in March 2020, suppliers and many dealerships closed down. Automakers predicted that auto sales would drop due to a recession. While sales of new cars did plummet in the early months of the pandemic, they quickly rebounded when car dealerships across Indianapolis and the country began selling vehicles online and offering flexible delivery options.
When suppliers were safe to return to work, demand was incredibly high and chip production has yet to catch up. Semiconductor chips were in high demand for business and entertainment devices as the work from home population soared.
Why is new vehicle inventory delayed?
Many auto plants have had to significantly decrease or even pause production of new cars, SUVs, and trucks. Some have shifted what they can produce to focus on assembling models that have the highest demand. Automakers are often building cars without the chips, parking them until they get chips into their factory, and then completing assembly.
How long will I see vehicle inventory shortages?
It’s estimated that it could be 12-18 months before we see vehicle inventory at a level comparable to before the pandemic. Chipmakers are actively looking to boost their production and figuring out how to assemble more chips at a faster rate.
If you have a vehicle that you’re searching for, contact our team at Ed Martin Chrysler Dodge Jeep RAM! We want to help you find the new vehicle you’re shopping for and our sales team is ready to get you on the road in your next vehicle.
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