Both new and used car dealerships in Hillsdale are struggling to maintain inventory as the worldwide microchip shortage continues.
Cronin Chrysler Dodge Jeep Ram in Hillsdale had 85 new cars in stock last May but only 17 this week, according to general manager Steve Rosenberg.
“This month’s allocation will give us a whopping 16 more,” Rosenberg said.
The COVID-19 pandemic along with a fire at a Tokyo Reneasa Electronics Corp. semiconductor factory in March 2021, which accounted for 30% of the global market for microcontroller units, contributed to the global chip shortage.
Combined with an increased demand for vehicles among people who received stimulus money in the past two years, this has put pressure on new car inventory, according to Ivan Drury, Edmunds.com senior manager of insights.
“It’s a shortage of epic proportions,” Drury said in an interview. “Some used vehicles are appreciating in value, which is unheard of.”
While Rosenberg said Chrysler is in better shape than Ford and General Motors, it is still hard to get cars.
“A lot of people are just happy with what they get,” he said. “Before the pandemic, we got what we wanted, not just what we could take.”
Ram Promaster vans and Jeep Cherokees are in high demand and difficult to stock, but the Chrysler Pacifica minivan has been the hardest to get, Rosenberg said.
“They are built in Canada, which is more shut down than we are,” he said. “It has made it really challenging to get those vehicles. We have had customers wait five to six months.”
Additionally, manufacturers are foregoing some advanced safety features in vehicles because of the additional microchips they require.
“They would rather build a truck without it than not build the truck at all,” Rosenberg said. “Some of the more popular features are often unavailable.”
Garin Ellis, sales manager at Frank Beck Chevrolet in Hillsdale, said it takes up to 20 weeks to get new vehicles. Only about 50% of people are willing to stick out the wait, he said.
Nevertheless, he said used car sales have improved, and the dealership currently has about 170 used cars in inventory
“Used car sales have been awesome,” Ellis said.
Dealerships that sell only used cars, like Hawkins Motor Sales in Hillsdale, have struggled to stock inventory, according to salesman Jim McCormick.
“We are having a hard time getting inventory because of the supply chain issues that are holding up the production of new cars,” McCormick said.
McCormick said the used car market works in unison with new car dealerships: fewer new cars means fewer used cars available.
“Sales of new cars drive the entire car market,” he said. “When they are not getting as many trade-ins because they don’t have the new ones to sell, there are fewer used cars on the market.”
Over the past two to three years, the price for the dealership to buy used cars has increased nearly 50%, McCormick said. At the same time, inventory has dropped from nearly 150 cars to between 60 and 80 on the lot at a given time. Without the advantage of getting car trade-ins off of a lease, it is tough to get SUVs and cars with low miles.
But even half-ton crew-cab diesel trucks have been extremely expensive to get.
“When you want to sell it, you are so far over book that the banks don’t want to finance it,” he said. “It’s a really hard situation for us.”
This corresponds with CarGurus.com used car price trends, where the market index price on used cars has increased 47% in the past two years, and more than 36% since February 2021. The size of the dealership has made it easier to deal with market prices, but they are investing in inventory that is going to move off the lot, according to McCormick.
“We are making sure that we get stuff that is selling,” he said.
McCormick has seen people looking for new vehicles shift to the used market when they could not buy something new, especially in commercial van sales.
“They were going to buy new, but they can’t get it,” he said.
Edmunds predicts that the automotive industry will face another challenging year of shortages amid steadily increasing consumer demand. Analysts say consumers were paying $662 above MSRP on average by the end of 2021.
“It doesn’t look like it will return to normal any time soon,” McCormick said. “There is still all of the supply chain stuff going on that is still affecting the car industry.”
Nevertheless, people have been understanding despite the problems, according to Rosenberg.
“Overall, people have been pretty positive. We are glad our customers are understanding. It’s our saving grace,” he said. “We just hope the market will get back to normal at some point.new
