Car-lot inventories dwindle as chip crisis goes on

FREMONT, Calif. - The exhilaration of buying a new vehicle has been replaced by another emotion— frustration over dwindling inventory.

"My lot used to be double packed. Now, my whole lot is empty," said Mark Hashimi, general manager of Fremont Toyota. "I was selling 600, 700 cars. Now I’m down to 250, 260 cars."

Hashimi said he’s lost hair over the industry-wide shortage of inventory. Analysts said it all hinges on semi-conductor computer chips that run most vehicle systems.

"The pandemic furloughed many of the plants. And also some of the plants shifted their production away from automobiles when automobile sales were essentially nil," said Larry Magid, CEO of ConnectSafely.

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As the COVID-crisis abated, consumers returned to their shopping ways, increasing demand for everything chip-dependent, he said. That’s exacerbating the problem.

Ford Motor Company says it’s slashing new vehicle production in eight plants in July and August. And the company expects to lose half of its second-quarter production.

"Tesla has taken the radar out of its newer Model-3. Some people think that may be because of a chip shortage," said Magid.

Even pre-owned vehicles are hard to come by. In June, managers at Sigma Auto Group in Concord said prices and demand for used vehicles are surging.

"There has been a shortage of new cars out there recently due to the chips, which has driven the preowned market up I’d say a pretty significant amount," manager Phil Jimenez said at that time.

Experts believe the current shortage may not catch up to demand until 2022.

"It looks like it’s going to hang on longer than anybody had hoped," said Michael Coates, editor of Clean Fleet Report, an online automotive publication. "It’s the old saying, ‘he who hesitates is lost.’"

Industry experts said car buyers have become the consumer group left searching for success in a field of increasing scarcity.