Chip shortage affecting local car dealerships

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MOBILE, Ala. (WKRG) — A global shortage in computer chips is affecting local car dealerships, with no end in the near future.

At the beginning of the pandemic, new car purchases were down so dealers cut out buying essential computer chips for those new cars. Now, it’s affecting used dealerships too, like Ethan Hunt Automotive in West Mobile. Hunt speaking with us Wednesday, saying “They said since we aren’t selling a lot of new cars we might as well cancel those chips and those chip manufacturers shifted to cell phones and ventilators and other technologies, where those chips can be used.” This all leading to a global shortage of these chips, which has forced automakers to halt production.

Because of the lack of new cars, business shifted to the used car industry, resulting in a lot less supply with higher demand. As with any supply and demand issue, Hunt says since new and used cars are both scarce, prices are on the rise… making fewer customers wanting to buy. Thankfully, Hunt says he hasn’t had to raise his prices as of yet, but many in the industry have.

Inventory is also a resulting issue. With more dealerships looking to used cars as the answer, there isn’t enough to go around. Hunt said, “I think it’s going to get even harder acquiring inventory, there is about a 22 percent reduction in inventory nationwide used car inventory, even the big dealerships are trying to acquire used cars.”

Hunt says his dealership saw this issue coming and prepared by stocking and planning ahead. “I think the best way to approach this is to plan for the long term and to always be on your guard in this business, but eventually it will be resolved and we hope that it will be a good year,” Hunt said.

The industry is expected to bounce back in about six months to a year.

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