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Why the chip shortage could get worse and make it harder for you to find a new car

The ongoing chip shortage means it's getting harder to find new cars, and it's probably going to get worse.
Published: Mar. 15, 2022 at 1:07 PM MST
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GOODYEAR, AZ (3TV/CBS 5) -- Car lots have a lot of empty space. “The past year, we’ve had the lowest inventory that we’ve ever had,” Whitney Yates Woods said. There are about 25 new cars at her dealership in Goodyear right now. Before the pandemic-fueled computer chip shortage, there would have been 80 to 100 vehicles. “There are certain makes and models that are really popular, and when they come in, they last one day or they’re spoken for before they arrive,” Yates Woods said.

Now, the Russian invasion of Ukraine could make the global chip shortage worse. “A lot of the neon, an element that goes into microchip production, comes from that country, and that’s going to be disrupted further,” said Karl Brauer, an analyst for iSeeCars. Brauer noted palladium and nickel, which are also used to manufacture vehicles, often come from Russia. “We’re going to see pricing go up, and availability of those elements and those rare earth metals go down, and that’s going to further restrict vehicle production,” Brauer said.

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To circumvent the chip shortage, Ford said it is going to ship Explorer SUVs without the chip for rear-seat controls for heat and air conditioning. Last year, GM temporarily stopped offering features like heated and cooled seats in some of its vehicles because of the chip shortage.

Yates Woods remains hopeful that supply will improve by this summer. “I have heard from General Motors that they are prepared,” she said. “They don’t anticipate the crisis that’s happening in the world to affect the supply chain any further than it’s already been impacted by COVID.”

In the meantime, if you are car shopping, be flexible. “I know when you’re spending a lot of money, you want the right color, you want the leather you want,” Yates Woods said. “I get that, but if you can get that same make of a vehicle, maybe in a different color, and you can be flexible on that, you’ll have a better opportunity to get a new vehicle faster.”

According to the latest consumer price index from the U.S. Bureau of Labor Statistics, the cost of new cars is up more than 12% this year, and the cost of used vehicles is up more than 41%.

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