Computer Chip Shortage Hurts September Auto Sales | The Salesmark

Computer Chip Shortage Hurts September Auto Sales

Computer Chip Shortage Hurts September Auto Sales

Car dealer profits are so high, that for now, they’re more than making up for a drop in auto sales volume due to a computer chip shortage. Meanwhile, some analysts expect the chip shortage to last right through 2022. Forecasters also expect the shortage to drive U.S. auto sales lower again in September — down about 25% vs. September 2021, to just over 1 million cars and trucks combined, according to a joint forecast from J.D. Power and LMC Automotive.

For sure, the low auto inventory problem has been a headache for car dealers trying to keep their customers happy. But financially, for dealers, the shortage is in the category of a “nice problem to have.” To try and work around the shortage, dealers are trying to get customers to order the vehicle they want in advance, put down a deposit, and wait for it to be delivered, rather than count on being able to buy a vehicle straight out dealer inventory.

Analysts also advise consumers to look farther away from home, if they can’t find the make and model they want, and be prepared to settle on features and options that might not be your first choice, in order to get a car sooner rather than later. Automakers have also been saying for months that they hope to keep inventories lean by historical standards permanently, even after the chip shortage is solved, and the COVID-19 pandemic is in the rearview mirror. Just not this lean.

Thomas King, president of the data and analytics division at J.D. Power, said U.S. retail customers, not counting fleet purchases, are expected to buy about 888,900 vehicles in September, with just 920,000 vehicles to choose from, in dealer inventory. In September 2019, pre-pandemic, retail customers bought 1,020,000 new vehicles, out of 2.9 million vehicles in inventory, King said in the forecast, which was published Sept. 28. “September results show that there are simply not enough vehicles available to meet consumer demand,” King said in the report. Between high prices and low selection, many consumers are waiting it out, according to a recent survey.

Kelly Blue Book says 48% of in-market auto shoppers who responded to its late-August survey planned to postpone their purchases. For now, dealers and auto manufacturers are not in the position of having to bargain. Due to the new vehicle shortage, the average transaction price per vehicle is expected to climb to a record high for the month of $42,802 — an unprecedented fourth month in a row over $40,000, according to J.D. Power and LMC Automotive. That also works out to a record dealership average gross profit per vehicle of $4,753 for the month, more than double the year-ago month, the firms said. For September, the average incentive is on pace to reach $1,755, down 54% vs. a year ago, they said.

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