How does the dealership chip shortage impact your next vehicle purchase?

Door To Door Auto Sales

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It’s no secret that the chip shortage has caused a significant decline in our industry, and unfortunately, it’s not going away anytime soon. The number of new vehicles shipped to Canadian dealerships fell by almost 30% in February 2021 as compared to February 2020.

 

This “chip shortage” that everyone is talking about in our industry is a semiconductor chip. For several reasons, production of these chips has declined globally. Current vehicles are powered by up to 3,000 semiconductor chips.

 

Contrary to what many of us in the automotive industry like to think, we are relatively small compared to the gaming and cellphone industries. Because of this reality, the gaming and cellphone industries have gained access to the already limited supply of chips, leaving the automotive industry behind.

 

Quite simply, Covid-19 is the major reason why we’re facing a global chip shortage, but it’s not the only one. The Many chip factories have had to close temporarily due to Covid outbreaks, which was exacerbated by the shipping delays. The massive storms in Texas that took place in February 2021 and the fact that Taiwan is responsible for producing 10% of the world’s semiconductor chips, and when it faced a severe drought earlier this year, many of the factories were also temporarily shut down.

 

Dealerships are responding to the shortage by doubling down on their used car inventories. Unfortunately, this isn’t easy either since used car sales have been dwindling since the beginning of the pandemic.

 

When looking for a new car expect less negotiating and discounts to put it simply with the lack of inventory dealerships need to hold their profit.  However, if you’re trading a vehicle in chances are you will be getting a higher amount for your trade in this market than you traditionally would!

 

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