Why Is There a New Car Inventory Shortage?

Plenty of drivers have bared witness to empty dealership lots, and some may have seen too-full manufacturing lots. What is causing this car inventory shortage? Well, Mascoutah shoppers are still experiencing disruptions to the automotive industry caused by the COVID-19 pandemic. A strong factor contributing to this is the automotive chip shortage, as many manufacturers canceled orders for chips, and the result has been a slow recovery despite things being set back into motion.

The car chip shortage has caused a shortage of new cars and thus, steep increases in the prices of vehicles new and pre-owned. Auffenberg Kia dives further into the causes of the car inventory shortage and some of the estimates on when we can expect it to end, below.

What is the Automotive Chip Shortage?

A strong factor contributing to the new car inventory shortages has been the car chip shortage, which began in 2020 and was caused by the COVID-19 pandemic. The automotive industry isn’t the only one impacted by the chip shortage – purchasing anything from a new phone to a new vacuum cleaner and even kids’ toys have been impacted. Electronic devices require microchips to run, which has created large impacts on industries all around the world.

Some of the main factors contributing to the automotive chip shortage include:

• Supply: Factories cut down or eliminated their chip production when the pandemic hit at the beginning of 2020 due to the global lockdown. Even with the increase in vaccinations and society in general opening back up, many factories are far off from normal production levels. The decrease in demand for new cars during the pandemic also meant that factories had little incentive to increase production again.
• Demand: Nowadays, post-pandemic demand for everything from new vehicles to TVs, gaming consoles, phones, and other electronics far outmatch the current supply of microchips. Manufacturers are struggling to keep up.
• Materials: Russia and Ukraine have control of the vast majority of the world’s neon and palladium – two crucial components in semiconductor chips. Russia’s invasion of Ukraine has limited both countries’ ability to produce the normal quantities of these materials.

When Will the Car Inventory Shortage End?

We can’t give an exact answer to this question, many experts disagree about when things will return to a semblance of normal. Predictions vary from 2023 to even later than 2024. The cost of vehicles is steadily increasing, and with all of the factors we mentioned above, that isn’t expected to change. At this point, buying a vehicle sooner rather than later is probably the best move for Trenton drivers, or even considering placing a factory order.

The good news is that growing vaccination rates are increasing against both COVID-19 and its variants. This means factories can start to increase their production levels, and manufacturers are getting creative with their designs. Also, it’s a great time to trade in your vehicle and get a greater value than you might expect.

Stay Up-to-Date on the New Car Inventory Shortage with Auffenberg Kia!

While times are tough, we hope to make it easier on our Shiloh-area customers. If you have any questions, feel free to contact us. You can also take the time to explore our financing and insurance guides online to make the most out of the current situation or visit us in Shiloh to chat in person.