Chip shortage drives up car prices
If you’ve recently purchased a new or used car in the Hudson Valley, you may have noticed reduced selection and higher prices. The reason is a global shortage of semiconductor chips, an important component in a modern car. The overseas factories that make them switched to consumer electronics when new car purchases dried up at the start of the Covid-19 pandemic. But demand has recovered faster than chipmakers could keep up, and as a result the supply of new cars is limited. This, in turn, has increased the cost of the average used car by $ 5,000 from the same period last year ($ 20,942 to $ 25,410) according to Edmunds.com.
“Sooner or later the used car markets will also experience a shortage,” said Bob Siracusano, owner of Sawyer Motors in Saugerties. âSometimes we have to go to an auction. There are normally 1000 cars to choose from. Now there are only 150.
Sawyer Motors typically carries 200 new cars; now he’s about 10. So in an effort to keep business flowing, they’ve made more presales than ever before. “When a client comes in, we tell them what we have to come [and] what colors, and [then] they pick a color as soon as that car arrives, âSiracusano said. “So if we have 50 cars next month, I bet 30 have already been sold.”
On the bright side, Siracusano said some banks and leasing companies have made an effort to help by extending leases for a few more months to keep even more consumers from new cars.
He said automakers will be ready when chip production increases.
“Ford and [I believe] Chrysler is just starting to stock vehicles that are waiting for chips, âSiracusano said.
But so far, there is no indication when the global chip shortage will end. As a result, automakers including Ford, Toyota and Nissan have announced that they will cut production of new vehicles this year, keeping supply below normal until 2022.