Wondering Why Car Lots Are Empty?

July 5th, 2021 by

The last time you took a drive around town, did you notice anything odd? If you have a keen eye, you may have spotted that a number of dealerships have unusually vacant car lots. Why aren’t these car dealerships restocking their inventory? There’s actually a very simple reason.

The Automobile Industry Chip Shortage

As vehicles become more technology dependent, the closer they get to essentially becoming computers with wheels. Computer chips are necessary to power this technology, making them an integral to the car production process. This fact plays an important role in the situation we currently find ourselves in.

The story starts a little before the beginning of the pandemic. Thanks to a variety of factors like production problems and restrictions on Chinese manufacturer sales, semiconductor manufacturers were having difficulty meeting existing demands. When the pandemic started, the automobile industry braced itself—expecting a recession to follow—by cutting back on orders to chip suppliers.

As expected, companies across the world—including chip factories—began shutting down. With most people now working from home, there wasn’t a need to produce cars at pre-pandemic levels. So, at the time, the gamble the automobile industry took seemed to pay off. However, the strategy turned out to be a bit shortsighted.

After some time passed and business started to pick up again, car manufacturers attempted to ramp up production. Everything was fine save for one thing—the computer chips. When car manufacturers reached out to their chip suppliers, they were informed that because they cut back on their orders, suppliers were prioritizing delivery to other industries.

What This Means for Dealerships

With most chips being sent to smartphone, video game, and other consumer technology manufacturers, the automobile industry is stuck between a rock and a hard place. While cars only account for a small percentage of chip demand, they’re still not receiving enough chips to get back to normal production. This situation is having a correlated effect on the dealers that sell manufacturer vehicles.

As dealerships sell the vehicles on their lot, they have to reach out to the car manufacturers to send more. Since production at the moment is down, the manufacturers are unable to completely fulfill orders. The end result is the empty parking lots we’re seeing today.

Shortages Aren’t a Problem at Freedom Honda

While shortages may be a problem at other dealerships, that’s not the case at Freedom Honda. We have a well-stocked inventory of both new and pre-owned Honda vehicles just waiting to be driven off the lot. Visit our dealership in Colorado Springs or call us today to talk with one of our trusted sales people to find the car that’s right for you.

Posted in Honda, News