‘We have demand and no supply’: Computer chip shortage affecting car dealerships

Business News

CRANSTON, R.I. (WPRI) — One of the many industries affected by the COVID-19 pandemic has been the auto industry.

Finding used cars hasn’t been as hard as trying to buy a new one. It’s been a frustrating year for those who sell new cars, including Bob Tasca III.

“You know when we went into COVID, I said ‘we have supply but no demand,’ now we have demand and no supply,” Tasca said.

Tasca and his family have been in the auto-dealer industry for almost 80 years and said none of them have experienced this in their lives.

Driving by any dealership, locally or globally, there are a lot of empty parking spaces in the lot.

“Normally you see car after car after car and you can see the lines are short but we still have cars though and we have to tell the customers that there is still a decent selection but clearly, we are way down from where we normally are,” Tasca said.

What’s happening at Tasca’s dealership is being repeated across the country as factories close due to a worsening global shortage of computer chips crimping U.S. new vehicle shipments.

“I think the average person doesn’t realize with an automobile is, we all have the fancy iPhones and cell phones and they have about ten chips in them… ten. An F-150 has 1,400 chips, 1,400 chips! So when you hear about the chip shortage that has affected the industry, it’s crushed the automotive space because the technology in these vehicles are so sophisticated, and literally every device in the car, you know adjust your mirrors, requires a computer chip,” Tasca explained.

While auto plants were shut down in April and May last year, computer chip makers shifted production to satisfy wild demand for laptops, gaming devices, and tablets. That created a shortage of automotive-grade chips, which has cost the auto industry over $210 billion globally in 2021.

“There has never been a time, since we have been in business, where we have seen this kind of inventory shortage. Never,” Tasca said.

How will the chip shortage problem be solved? Tasca says making them in the United States should help fix the problem.

“Last week Ford announced a major investment in a chip manufacturer, so you’ll see more chip manufacturers come up, and you’ll see more redundancy in the supply chain, and you’re going to see companies like Ford actually start to build their own chips so they can control their own destiny,” he explained.

“All of us have learned a very tough lesson on managing the supply chain because never do we want to be put in a situation where a couple of companies, particularly overseas, can have this much control over the industry,” Tasca continued.

Tasca is optimistic parking lots will be filled with new cars soon.

“The good news is there is a light at the end of the tunnel but we are so far behind the eight ball, our inventories are depleted our pipelines are almost all sold out,” he said.

A few years ago, cars would come off of the truck and were available for sale, now when they come off the truck they are already sold.

“It’s going to take some time, maybe a year before we get back to some new normal,” Tasca said.

Ford isn’t the only company hoping to start developing and producing these micro-chips in the United States. Samsung recently announced it’s going to build a $17 billion manufacturing facility in Texas.

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