Microchip shortage clips new auto sales

New vehicle sales in the Houston area hit a wall last month as the global microchip shortage continues to crimp manufacturing and limit supplies.

New vehicle sales in the Houston region fell 8 percent to 16,633 units last month from 17,974 units in August 2020, when the pre-vaccination economy depressed auto sales, according to the latest TexAuto Facts Report published by Houston-based data company InfoNation. Month over month, retail sales in the region fell 12 percent from 18,857 units in July.

“The sales are being squeezed so tightly,” said Daniel McDowell, InfoNation’s president and owner. “There’s just not enough vehicles to be sold because of the microchip shortages.”

The decline in new vehicle sales is something analysts saw coming, he said, as demand for vehicles outpaced supply. Compounding the effects of the microchip shortage are plant shutdowns as the pandemic’s latest wave causes outbreaks and impedes production.

“There’s just a lot of plants that are idling and not producing vehicles,” he said.

Hurricane Ida, which flooded dealerships and ruined hundreds of thousands of vehicles, took a bite out of inventories nationally, he said.

The combination of tight supplies and surging demand has new vehicle prices shattering records. The average sales price for a new vehicle in the region jumped to $47,321 in August from $45,835 in July and $41,193 last year.

In turn, high prices are also slowing sales volume, McDowell said. “People are holding on, waiting for those sky-high sticker prices to come down.”

Rental car companies are struggling with supply, too, he said, noting some rental lots have only minivans left. “They’re just trying to find anything with four wheels.”