Are you getting ready to purchase a used car?
Be prepared to spend a lot more money than you would have this time last year or not have the choices you thought you'd have.
It's all because of the fiery destruction of a Japanese chip manufacturer that serves the auto industry, coupled with an explosion in sales of chip-thirsty personal electronic devices. The lethal combination has slowed vehicle distribution to auto companies and, in turn, dealers.
They’ve now slashed production.
"Basically, what you’ve got is a lot of pent-up demand," said John Preston, general manager at Marin County Ford. "You’ve got a bunch of people that want to get out, get on the road, go do fun things, but unfortunately this chip shortage issue has created a challenge for us to get the inventory to meet that demand."
New car prices have risen.
More people are buying used cars instead and those prices have also risen.
"The used car market is as feverish as it’s ever been also," Preston said. "We have a turn cycle that’s typically in that 45 to 50 days and right now it’s down to single digits. It could be as quick as three, four, seven days."
The shortage could spell trouble for those with leased vehicles with maturity dates over the next several weeks and months, too. With inventory low and little to no options for new leasing, customers might be forced to extend their lease and wait for inventory levels to come back.
"The supply is just not there," he added.
Preston believes the automotive chip shortage could last until the end of the year, keeping car and truck prices higher.
In all, the Japanese company commands nearly one-third of the global market share for microcontroller chips used in cars.
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