BOISE, Idaho — A microchip shortage pumped the brakes on new car shipments to dealerships across the country, creating a higher demand for used cars.
Like Idaho real estate, dealership officials tell us car buying is currently a seller's market because supply is low and demand is high.
Local car dealers say the value of used cars has never been better than it is right now.
"If you’ve got a trade-in and you’re in the market, it’s not a bad time. Of course, everybody always hears that from us, but it’s really not a bad time," said Jim Sterk, General Manager at Lithia Ford Lincoln of Boise.
So, how did car dealerships get here? When the pandemic broke out in the United States and businesses rapidly shut down, consumer behaviors began to change with the times. More and more consumers turned to online services, forcing businesses in every industry to accommodate the change.
Competing against online retailers like Carvana and Carfax, car dealerships were no exception. During the pandemic, dealerships like Lithia Ford and Bronco Motors adopted CDC-compliant practices to make in-person shopping safe and efficient.
Both Lithia Ford and Bronco Motors told Idaho News 6 that around May 2020, car sales took off and showed no signs of slowing down.
"Frankly, I’ve had some of the best months in spite of the pandemic," said Bronco Motors CEO Grant Petersen.
But lack of inventory as a result of the microchip shortage is slowing dealerships down. In a normal year, Lithia Ford Lincoln has about `1,000 cars on their lot. Today, they have less than half.
With the current shortage pushing inventory to historic lows, larger dealerships are able to work through the setback.
"Luckily with the brands we sell new, we have enough volume coming in. We’re still going to be short on some hot products, but we’re in a little better shape just because of our volume," said Petersen.
On the other hand, some smaller, locally-owned dealerships do not have the resources some of the "bigger guys" have. Bobby Petersen, the owner of Fairly Reliable Bob's used car dealership told Idaho News 6 his spot simply doesn't have the money to compete.
Before COVID, Petersen left car auctions with 10-13 cars. Now, he's taking home 2-3. But, Petersen said this shortage in supply and the higher demand for used cars, while not convenient is not impacting his business, yet. Petersen predicts the impacts from the microchip shortage won't happen until sometime this Fall and he's prepared for it.
As for when this issue could be resolved, Intel Corp announced Monday the company is in talks to start producing chips for carmakers to alleviate the shortage that has idled car factories.