Do you like that new car smell? Well, you’re less likely than usual to enjoy it in Franklin County or anywhere else right now.
A perfect storm of supply-chain issues has resulted in a worldwide scarcity of new vehicles, the likes of which local dealers have never seen. The COVID-19 pandemic abruptly shut down auto factories for a few months last year and manufacturers of semiconductor chips — which go into vehicles for functions like data storage and power steering — have been trying to catch up to the demand ever since the market rebounded sooner than anticipated.
“In modern vehicles, there are hundreds of them in every single car,” said Jeff Wundt, a general sales manager for Lundgren Auto Group, which has two dealerships in Greenfield and ones in Auburn and in Bennington, Vt. “It’s gotten to the point when we’re getting Hondas with one key because (the auto company is) taking the chips that would be in the keys” to put them into other vehicles. He said he has been told customers will be given a second key when there are enough semiconductor chips to go around.
“Honda has told me that things will normalize, hopefully, come 2023,” he said. “That could be them being pessimistic or realistic, but they don’t seem optimistic that this going to be short-term.”
Wundt said Lundgren has approximately 25 percent of the new vehicle stock it would normally have. He also said nearly all new vehicles now cost more than usual, with customers often having to pay the manufacturer’s suggested retail price (MSRP), also known as “paying sticker.” And, Wundt said, many vehicles are being prepaid before they arrive on the lot.
Wundt said he has not seen a vehicle shortage like this since the 2011 tsunami-induced Fukushima Daiichi nuclear disaster in Japan, even though that affected only Japanese brands.
“And this is even worse,” he said, adding that the challenges are exacerbated by a widespread shortage of vehicle technicians.
According to a report from CNBC.com, General Motors in February expected the chip shortage to cut its earnings by $1.5 billion to $2 billion this year, while Ford thought its earnings could be lowered by $1 billion to $2.5 billion. Honda and Nissan combined predicted to sell 250,000 fewer vehicles through March. The Washington Post reports 17 auto factories in North America and Europe have recently halted or reduced production. The shutdowns have affected plants in Michigan, Kentucky, Kansas, Mexico, Canada and Germany, the newspaper reported.
Tom Dillon, a second-generation co-owner of Dillon Chevrolet in Greenfield, said dealerships around the world are experiencing the same problems, though his sales have not slowed down.
“The car business, even though there is a shortage, is very strong right now,” he said.
Like Wundt, Dillon said he has roughly 25 percent of the new vehicles he typically would. But as a result, he said, the vehicles are sold before they make it to his lot.
Dillon also said the demand for used vehicles has increased dramatically, being worth 25 to 30 percent more now than they were six months ago. He said he believes some of the supply-chain issues could have been avoided in the United States if semiconductor chips and other vehicle components were manufactured here.
Bob Cartelli, who owns Toyota and Ford of Greenfield as well as The Body Shop, said the situation is worse for American automakers than it is for Toyota, because the Japanese company better anticipated the problem. He said Ford has 15,000 trucks it can’t deliver due to the chip shortage, although the iconic company plans to start sending trucks to dealerships, which will have to insert the chip themselves. Cartelli said this is a relatively simple task.
He said automotive technology has come such a long way in such a short amount of time that this type of problem would not have existed even 15 years ago. He also said predicting the end of this global predicament “depends on who you want to believe.”
Reach Domenic Poli at: dpoli@recorder.com or 413-772-0261, ext. 262.