Low inventory, high car prices due to microchip shortage

Many microchip factories closed during the pandemic, leaving a shortage of available cars around the world. As a result, the prices of new and used cars are higher than ever.

MIDDLEBURG HEIGHTS, Ohio — If you’ve noticed that many makes and models of cars aren’t available on lots, you can thank the lack of microchips around the world due to COVID-19.

The problem has forced some automakers to slow down or even halt production, driving prices of new and used vehicles to record highs.

According to the Kelley Blue Book, the average price of a new car is around $43,000, forcing many people to look for older cars. This, in turn, has raised the average price of used cars to more than $25,000.

The shortfall is in semiconductors, the material that makes up microchips. They can be found in everything from cell phones to washing machines to ID cards.

“Especially microprocessors, which are essentially the brains of a wide range of electronic devices,” said Christian Zorman, an engineering professor and microchip expert at Case Western Reserve University. “They can, to a large extent, be found in anything electronic or moving like cars. Yes, cars are electronic devices.”

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Cars can have as many as 100 microchips, which control things like engine timing and climate settings. But chips are in short supply, thanks to COVID.

“When there is a supply chain disruption in the production of electronic components for computers, that disruption will be felt by automobile manufacturers as well,” Zorman said.

The pandemic forced chip suppliers to close factories. At the same time, people around the world began to work and study from home and began to buy electronics in large numbers, which overwhelmed the remaining chip factories. Now, newly-vaccinated Americans are looking to buy cars again, but it’s nearly impossible for carmakers to get microchips, making it more difficult to buy a car.

“Currently, we have over 100 cars to sell across all five of our stores,” Kirt Fry, president of Sunnyside Auto Group, told 3News. “Normally at this time of year, we would have 800-1,000.”

Since demand for microchips exceeds supply, car prices are higher than ever.

“It’s definitely a seller-type market,” Fry said. “This August would normally be an evacuation month, but it is more of a normal month.”

Toyota, General Motors, Ford and Nissan have temporarily closed some of their factories because they have too few chips to install in their cars. Experts say chip shortages could hit the industry by 2024.

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