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Pandemic-related car shortage leaves consumers with fewer choices, higher prices

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Brad Poole, president of the Watermark Auto Group and general manager of Watermark Ford of Marion, describes how the dealership no longer has a surplus inventory of new vehicles due to a shortage of micro-processors, brought on by the pandemic, needed to run various functions on new cars and trucks.

MARION — When Brad Poole looks out across the lot, he sees a lot of empty space.

As the president of Watermark Auto Group and the general manager of Watermark Ford of Marion, Poole is used to seeing new automobiles, all perfectly shined and placed in rows to entice car shoppers.

Instead, his dealership’s inventory is a fraction of its usual size. Poole is not alone. His peers all face the same sight.

Across the region and nation, new cars are scarce thanks to a worldwide shortage of semiconductors — computer chips — which are vital to making a variety of automobile functions happen.

This lack of chips has forced manufacturers to slow or completely stop the production of cars.

In Southern Illinois, dealers — and car buyers — are feeling the pinch.

“It seems to be all across all manufacturers,” he said.

Poole said there are a variety of reasons for the chip shortage.

The COVID-19 pandemic temporary closed some of the very few factories producing the processors. A typhoon in Japan led to one manufacturing closing and a fire damaged another facility.

Additionally, many producers redirected the production of the silicon chips away from automotive uses — since car sales stagnated in the early months of the pandemic — to producing the components for other more in-demand products such as ventilators, computers and cellular phones.

“The sale of electronics (during the pandemic), of course, was huge. The in-home learning and then the at-home gaming all skyrocketed during this time, so all of the microprocessors got funneled away from cars which is normally 12% of the microprocessor business,” Poole said.

Poole, who overseas six new car dealerships in Southern Illinois and Western Kentucky, said the shortage, combined with increased demand for new vehicles, has been a sort of “perfect storm.”

He said inventory at Watermark Ford of Marion now is about 30 cars and trucks. Usually the dealership has more than 120 vehicles on the lot.

At Auffenberg of Carbondale, General Manager Jamey Turner said his inventory is less than one-third of normal, and what cars the dealership has are selling quickly.

“Normally we’d have more than 100 cars on the lot,” he said. “Right now, we have 30 and we’re at a pace where we could be out by the end of the month and have very little on their way.”

Turner says the manufacturers are building as many vehicles as they can, often installing chips in the cars to complete production and then parking the vehicle, removing the chip to build the next car.

He added that plants are being shut down temporarily while other factories are slowing production. He said inventory is selling very quickly and many of his sales team are making sales before the cars even arrive at the dealership.

Poole said with economic stimulus programs, many consumers are in the market for cars and dealers across the region could be selling more cars — if they had them.

“Normally we have a three-month supply of automobiles, but they are selling almost immediately. We currently have just a 22-day supply,” he said.

The shortage also is impacting the used car market. With fewer new cars available, the demand for pre-owned vehicles, especially those made in recent years, is exploding, Steve James, of Elite Auto Sales in Herrin, said.

Added demand, he explained, means higher prices.

“There’s just a shortage of vehicles right now,” he said. “The newer pre-owned cars are just way too much money, in my opinion.”

James said that he recently saw a 2021 pre-owned pickup truck sell at a wholesale auction for more than the original manufacturer’s suggested retail price for the vehicle.

“The demand is just way up there,” he said. “This is just plumb crazy.”

For now, he suggests those in the market for a used vehicle consider cars which are four, five or more years old.

Poole said the manufacturing process for microprocessors designed for cars takes several months. Add to that the time it takes to build and deliver cars and he expects it will be late 2021 before dealer inventory begins to creep upward.

“I don’t know if this is temporary or if it’s the ‘new’ normal,” Turner said. “COVID really changed everything and then this came along. It’s not how we used to do things normally and so every day we have to come in and get educated and plan accordingly.”

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