ADRIAN — Due to a microchip shortage, new vehicles are on back order anywhere from six weeks to six months, but local dealerships are taking it all in stride.
For one thing, they are selling more used vehicles and even though various options and even colors are hard to come by, the dealers are touting their ability to get customers made-to-order cars and trucks.
“The exciting part is we’re selling a lot of cars. I just wish we had the ability to get more new cars. And I think that certainly we’re being told that the chips have had a big impact on the availability of vehicles,” Garry Clift, owner of Clift Buick GMC of Adrian, said. “We’re doing a good job of getting people to order vehicles, and that’s working out quite well. It’s nice if you have it on the lot and you can take delivery of it immediately, but if we can plan this out a little bit and actually get exactly what you want on order for you, that’s been working out for us too. When the car comes in, it’s sold and it goes right back out.”
A car or truck part could take anywhere from 500 to 1,500 chips depending on the complexity of the part. Automakers are manufacturing vehicles without the chips and letting them sit until the chips come in.
The shortage stems from the shutdown at the beginning of the COVID-19 pandemic. Automakers put their orders for chips and other parts on hold and stopped manufacturing, thinking that vehicle sales would come to a halt.
Initially they did, but with pent-up demand, 0% financing offers and online orders, vehicle sales quickly rebounded.
At the same time, the pandemic increased demand for the personal electronics such as cell phones and laptops that the chips are used in to the point where production could not keep pace with demand.
Clift is selling more and more used cars, and prices have increased on those vehicles as they have on new vehicles.
“Right now, we’re setting records with used cars because we’re buying a lot of cars from private parties and then reconditioning them and putting them on our lot. We’ve had great success doing that, and that’s worked out very well,” Clift said. “There have been some price increases, but I think that’s true of all products right now, that a lot of these products are scarce and so they’re going to be a little more costly, but they still make a lot of sense. That’s not a problem.”
Orders are taking a long time at Clift and it’s not uncommon for salespeople to have to go back to customers and tell them that their vehicle is going to take longer than initially anticipated.
“It might be anywhere from three months to four months; five, six months. But if you can plan it out a little bit, we can get a vehicle ordered to your specifications. It’s not ideal, not being able to take it now today, but we can make arrangements for a car to be built in the near future and you can take delivery of it that way,” Clift said. “Some of that (orders taking longer than expected) goes on because some of the components that go into the cars for one reason or another are not available and that delays some of the cars. We just have to do the best we can when we tell people what the expectations are when it will be delivered. But I think if you’re in the process of getting a new vehicle, it’s good if you just go into it with the attitude that you’re a little bit flexible when you can take delivery. We’ll do the best we can to get it in a timely manner.”
It seems like dealers are doing their best. Hank Soto, general manager of Bell Chevrolet Cadillac of Adrian, said his dealership has not had to tell customers that their orders will take longer because they say that in the beginning, but he is experiencing the same kinds of things with new and used vehicles.
“On the new car side, we’ve been relying on customers doing orders. So they come in to talk with their salespeople, order their vehicle the way they want it, color and everything, and we do the best we can to get that in in a timely fashion. If that’s not the case, we have stuff that we have ordered for the lot that people are putting their names on before they get there,” Soto said. “On the used car side, we try to buy cars when people are trying to sell them. We’re taking in those vehicles and off-lease vehicles. We’re heavily relying on used cars.”
The price increases are directly attributable to supply and demand issues, Soto said.
“They’ve (prices) increased. I wouldn’t say a lot, but they’ve increased. I haven’t figured out the percentage. But it’s just a simple supply and demand thing. When the supply is short and the demand high, the prices go up a bit,” Soto said.
Orders are taking much longer than normal, but customers have been patient, Soto said.
“The orders are anywhere from six weeks to three months, depending on what the order is, if we have an allocation for it. But luckily our customers have been very loyal to us and they’ve been patient with us,” Soto said. “We’re very up front with them in the beginning and give them the estimate six weeks to three months, and just give them examples of customers that have had to wait longer and we’ve had customers that have gotten their vehicle quicker than the estimate.”
Vehicles are selling, however.
“We definitely would be in a better position if we had more new cars around, because there are so many leases that are coming due and a lot of customers are having to extend their leases or buy their leases. So we’re in an OK situation, but it would be much better than if we had more new cars on the ground,” Soto said.
Still, this situation is much better than a recession, Clift said.
“I bought the dealership in March of 1980. So I’ve seen a number of recessions and we had a lot of vehicles but we couldn’t sell them to anybody,” Clift said. “I guess if I had to choose, I’d rather not have very many vehicles but a lot of sales going on. We just do the best we can to make it right with everybody.”
The Detroit Free Press contributed to this report.
This article originally appeared on The Daily Telegram: Adrian automobile dealerships take microchip shortage in stride