The decade of the 2020s will likely go down in history as the “shortage decade” as it seems the market keeps running out of needed products. First it was toilet paper and lumber and now parents are being forced to drive from store to store to find baby formula.
On the automotive side, a shortage of semiconductor computer chips has grounded new car production almost to a halt, and the domino effect is that used cars are now more expensive.
Virtually everything we use today that contains any form of electronics is run off computer chips. So, if you can buy a new computer, why is there a shortage of new cars?
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One major reason, according to Steven Loveday writing for “U.S. News and World Report,” the Covid pandemic forced new car manufacturers to close factories and halt production. At the same time, people stuck working at home began buying new computers, other electronic equipment and even appliances.
Recently, the problem was compounded with Russia’s invasion of Ukraine. Russia is a major supplier of neon gas which is used in the manufacture of the chips.
When production of new cars ramped back up, the industry ran into a problem. A computer has very few semiconductor chips when compared with a modern automobile. In fact, cars today are filled with little minicomputers that work everything from power windows, backup cameras, headlights, heating and air, engine timing to heated seats. Even the “check engine” light appears due to a computer chip.
Due to the shortage, many people are having to place factory orders if they are dead set on a particular make and model. Generally, the wait time is about three months to take delivery and the car or truck may still come without certain ordered features such as seat warmers as the manufacturers promise to retrofit the vehicles with non-essential features when the chips become available.
Those in need of a car immediately and can’t wait months for a vehicle are turning to used cars and as a result, the prices for used cars are spiking.
As someone who grew up with a motorhead of a father, I always have followed his advice. I have never in my lifetime purchased a new car -— the biggest reason is that new cars lose almost a third of their value when you drive it off the lot.
Sure, new cars come with great warranties, but so do used cars. Also, cars of the past basically reached the end of their lifespans before the odometer flipped 100,000 miles. Today’s cars have advanced rust protection and engines that are designed to last almost forever if maintained properly.
While I have always favored used over new, now is just simply not the time to buy any car unless it is absolutely needed. I recommend you stock up on chewing gum, baling wire and duct tape to keep your current vehicle on the road as long as possible.
The places that have the most used cars in stock are tiny car lots that offer no warranties whatsoever. Avoid these places at all cost as most, if not all, of the vehicles on those lots were purchased at auction, which means the vehicle was a trade-in that a major dealership did not think it could resell.
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My wife learned that lesson recently. She was in dire need of a vehicle, but she had her mind set on having a convertible. After going to countless lots, she found a Volvo with a convertible hardtop.
When I saw the car lot where she found the vehicle, I immediately warned her we were likely making a mistake. We had cash to buy the vehicle, but the saleswoman still almost begged us to finance the car through them.
“We normally don’t sell cars for cash,” the saleswoman said.
We should have turned on our heels and left, but my beautiful bride was head over heels in love with the car, so we bought it.
One month later, the retractable hardtop quit working and the repair estimate was nearly the amount of money we paid for the car.
My wife no longer drives a convertible and about a month after the retractable top broke down, the heating and air quit working properly.
The air conditioning system on the car still doesn’t work. We are waiting on the manufacturer overseas to send the needed computer chip.
Scott Hudson is the senior reporter for The Augusta Press. Reach him at scott@theaugustapress.com
