Supply chain shortages impacting new car supply due to lack of computer chips, study shows

Lack of computer chips is impacting new car supply

BEAUMONT, Texas — Looking for a new computer or a new car? Good luck.

The chip shortage we’ve tracked for months has only gotten worse, according to a new report from the US Department of Commerce.

The report called the supply chain of these chips “fragile.”

So what’s causing this shortage?

Ben Case with Classic Chevrolet said it can all be traced back to the start of the COVID-19 pandemic, and it could be another year or more for the supply to catch up with the demand.

“It’s been a little bit of a challenge to navigate but it hasn’t been that bad,” Case said.

Case said Classic Chevrolet has been feeling the impacts of the chip shortage since the start of 2020.

He said inventory has been up and down over the last year and a half.

“Several years ago we were up to where we had multiple hundreds of vehicles on the lot,” Case said.

But a few months ago, Case said things changed.

“We got down to about 30, maybe 20 to 30 vehicles,” Case said.

The new report from the US Department of Commerce backs what Case is saying.

The report says in 2019, manufacturers had, on average, a 40-day supply of chips. Today, they have a five-day supply.

But Case said his dealership has found some alternative options for those searching for a car. They’ve been able to find drivers used cars.

“There’s actually been a lot of purchasing vehicles outright from customers to help them as well,” Case said. “A lot of people with extra vehicles, they know what their car is worth more than it ever has been. Used cars have become a commodity at this point.”

As far as new cars go, Case said when it comes to General Motors, more expensive models may be more likely to be in stock.

“General Motors has tried to prioritize their higher transaction price vehicles like, they’ve been trying to produce as many Escalades and Yukon Denalis and heavy-duty trucks,” Case said.

When will the supply finally catch up to the demand? Experts said it could be a while.

“That increased demand is going to continue to play out as things continue to get better. We’ll be able to help those customers and I think things will get kind of back on an even keel in maybe two years, a year and a half,” Case said.

Case also said the building of chip manufacturing plants in Austin and Ohio in the coming years should help boost production and allow supply to catch up to demand in the auto industry.

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