By JORDYN KRETCHMER and MADISON LAMMERT
For the Republic-Times
As COVID fades and life begins to return to normal, the auto market industry continues to grapple with a semiconductor microchip shortage.
At the beginning of the pandemic, auto makers decided to slow the production of these chips – which are staples of any modern technology – due to the decrease in demand for new vehicles.
Now that the pandemic is subsiding, demand for vehicles is returning. Vehicle dealerships in Monroe County, as well as those across the U.S., do not have the inventory to meet customers’ needs, making barren dealership lots increasingly common.
Mike Rich, general manager for Mertz Ford in Millstadt, has been impacted by the shortage. Rich has worked in the auto industry for approximately 40 years, and he said he has never seen anything quite like this.
He said he does not know exactly when dealerships might return to normal.
“We could see a tweak upwards in August-October of this year, but for local businesses to fully recover and get back to their normal inventory, it could (take) as long as March of 2022,” Rich said, later adding, “If things stay like this, everyone will be out of cars.”
It’s not just new car dealers who are being impacted. Mitchell Martinez, owner of E-Sell Auto Sales in Cahokia, sells pre-owned cars. He has seen prices skyrocket by $3,000-$5,000 as a result of the chip shortage.
He equated the current car shortage to the 2008 housing crisis.
“I kind of take it as in 2008 we had an issue with housing where the market had gone up so high that the inflation went crazy on the market and they were, I want to say, making loans on mortgages for 150-170 percent of the estimated value of the house and then it crashed,” Martinez explained. “People (had) loans way over what the value of the house was so, they ended up going bankrupt or had foreclosures. That’s going to be the same thing that happens with the auto industry: it’s going to peak and then crash once the chips come back out.”
Fortunately, Mertz Ford has not experienced any layoffs, but they have undergone other changes as a result of the shortage. Rich said in order to make up for the lack of inventory, the dealership has changed their business strategy.
“Instead of advertising to sell cars, we’ve switched to trying to buy cars that we can sell,” Rich explained.
The big lesson for those looking for a new vehicle? Wait, if possible.
“If you need a specific vehicle and it’s not just a desire, if it’s a desire, wait,” Martinez said. “If it’s a need, then price is irrelevant because you physically have to have the vehicle for transportation to work or whatever. Just be conservative and buy the vehicle that best suits your needs.
“There’s no way around it as far as where you go or who you buy from.”