Computer chip shortage begets higher car prices
Automakers have had to cut production, so demand exceeds supply
For the next few months, Charlie Gilchrist figures his 11 car dealerships in the Dallasfort Worth area will sell just about every new vehicle they can get from the factories — and at increased prices.
A global shortage of computer chips has forced automakers to slash production. The result has been far fewer vehicles on dealer lots, just as the waning pandemic has fueled a pent-up consumer demand for cars, trucks and SUVS.
“It’s pretty evident when you pull onto our lots that there’s not much selection,” said Gilchrist, whose lots carry brands ranging from General Motors and Ford to Nissan and Volkswagen. “Our (sales) volume is falling because of the sheer lack of inventory. It will still fall during the next two or three months.”
The across-the-board surge in auto prices contributed to last month’s jump in U.S. consumer prices, the government
reported Wednesday. A record 10 percent increase in usedvehicle prices accounted for roughly one-third of April’s overall rise in consumer prices.
Ford expects to produce only half its normal number of vehicles from now through June. GM and others have resorted to halting production of some cars and smaller SUVS and diverting computer chips to higher-profit pickup trucks and large SUVS. Leading automakers are warning of diminished earnings.
The vehicle scarcity and the
soaring prices can be traced to the eruption of the coronavirus 14 months ago. As the virus spread, auto factories shut down for a couple of months. With millions more people working from home, demand for laptops and monitors led semiconductor makers to shift from autos to personal electronics. Soon, though, a fasterthan-expected economic rebound boosted demand for vehicles, and auto plants tried to restore full-scale production. Yet chip makers couldn’t respond swiftly enough.