Cars, chips and COVID-19: Why you might be having trouble finding a new vehicle

Business News

PROVIDENCE, R.I. (WPRI) — A surge of COVID-19 cases in Southeast Asia, where many semiconductor chip manufacturers are based, has created a worsening problem for automakers.

As a result, General Motors has paused production in most of its North American plants for at least two weeks. Ford announced it will also stop making pickups at its Kansas City assembly plant for the next two weeks.

Dr. David Cortes, a professor of supply chain management at Providence College, tells 12 News with different industries globally interconnected, it means there are global supply chain risks, and supply disruption is one of them.

Semiconductor chips are used in laptops, phones and cars.

“These chips shortages don’t seem to be affecting electronics as heavily as it has the automobile industry,” Cortes said.

Automakers reported U.S. dealers had just under a million new vehicles on their lots in August, which is 72% lower than the roughly 3.5 million recorded in August 2019.

“One issue right now is that Southeast Asian countries continue to experience temporary shutdowns in both plants and logistics networks because of low vaccination rates.” Cortes said. “Because of this, companies like Nike and Gap have been trying to lobby the U.S. government to send more vaccines in the form of donations to countries, such as Vietnam.”

As of early August, the U.S. donated and shipped more than 110 million doses of its COVID-19 vaccines to more than 60 countries, including some in Southeast Asia.

Rhode Island Auto Dealers Association (RIADA) executive vice president Jack Perkins tells 12 News if you’re looking to buy a new car, you’ll have to be patient.

Alternatively, if you have a vehicle in good shape to sell or trade in, Perkins says dealers are willing to pay good money to owners right now. RIADA said you will have the best luck with vehicles under 5 years old.

“The advice I would give is to not do so until they’ve secured the new vehicle, especially for consumers that may be moving across the country or across long distances,” Cortes said.

Cortes said the rental car industry is also dealing with a short supply, since many companies sold a bulk of their fleet last year when fewer people were traveling.

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