Smart microchip shortage impacting local car dealerships

2 months 4 weeks 9 hours ago Friday, July 23 2021 Jul 23, 2021 July 23, 2021 9:28 AM July 23, 2021 in News - Local

A global microchip shortage is impacting local car dealerships.

"When the pandemic hit in early 2020, the auto manufacturers, supply chain managers all cut their orders off from the semiconductor business,” said Jim Tipton, President of Tipton Auto Group. “The reason they did that is because the semiconductor will cost $10-$12 apiece and there’s 3,000 of them in every car."

The semiconductors are very important for the digital operation of a car. As Tipton explains, the auto industry was not a priority as the pandemic forced people to be indoors.

"And when the people stayed at home, they bought new TV sets, new computers, new laptops, new Gameboys, new PlayStations -- and those took priority at the chips supply companies," Tipton said. "And when the manufacturers were ready to get back into it for the autos, they were in the bottom of the line."

Experts say that in an electric vehicle, there are thousands of microchips installed everywhere that work digitally.

"It is actually inside everything that is electronic: Transmissions, engines, infotainment systems, security systems in the vehicles nowadays,” said Ramiro Salguero, Services Director at Tipton Auto Group.

Now, some local dealerships have fewer new cars and more used cars. Tipton said the auto industry in the U.S. has lost 2 million units in sales.

"We do not know what quarter of next year or what quarter of 2023, we are going to get back to the size inventories that we are used to seeing on new car inventories," Tipton said.

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