The chips are down, but sales are up

Normally packed with cars, John LaRiche's car dealership these days is showing more pavement between vehicles. It's not a car dealer's favorite look. "It just doesn't look like you have any cars," he said. But his sales numbers tell a different story. Last month was LaRiche Chevrolet Cadillac's best month for sales since 2008, he said. "Every car I get in, it's either presold, or it gets sold within a couple of days," he said. "So that's a good problem to have," LaRiche said philosophically. "But it just doesn't look like you have any cars." The unusual situation is a combination of high demand for cars and a worldwide shortage of computer chips, which are contained in cars along with a variety of other consumer goods. The shortage caused U.S. schools to face long delays while trying to acquire laptops for students learning remotely, and set off mad scrambles for new electronic products like the iPhone 12 and the PlayStation 5. Because of the shortage of chips, fewer cars are available to be sold. The lack of supply has forced General Motors and Ford to cut production at their North American factories, including two GM facilities in Michigan. "You're probably talking about a three-month process to ramp up the production of chips," LaRiche said. Findlay Chrysler Dodge Jeep Ram also has fewer cars on the lot than normal. Yet its sales have spiked, too. "We had our best month ever last month," said Jeff Cole, general manager. "We expect another great month this month." Circumstances being what they are, the dealership is doing all it can to avoid missing out on a sale. "We have more resources dedicated to acquiring vehicles than we ever had in the past," Cole said. He declined to disclose what those resources are. "A lot of people are nearly out of inventory," he said. "We are not." Car dealerships are not the only ones affected by the shortage of computer chips. "They go into almost anything you can think about that is a consumer (good) that would have any electronics in it," LaRiche said. "So during COVID there were a lot of people who were buying game stations and buying motorcycles and buying motorhomes and buying cars. The demand just really pumped up quite a bit. "If you go by a marine store, you don't see any jet skis out there or very, very few boats. Same with RVs and same with automobile lots." Auto manufacturers are still making cars, but some are getting set aside until computer chip production catches up. In the meantime, the deliveries to LaRiche's dealership are about half the normal quantities, he said. Of course, a used car already has the needed chip, so used car sales have spiked. "Last month, I started the month with 40 used cars in stock," LaRiche said. "Forty. And I ended up selling 85 used cars because pretty much every car that we took in, we sold in a hurry. Within a few days. That's just the marketplace right now." LaRiche expects the supply of chip-stocked cars to catch up in about 60 days. Wilin: 419-427-8413