West Virginia auto dealerships, like others in the industry nationwide, have had to adapt how they do business in response to the (partially) pandemic-driven microchip shortages.
The COVID-19 pandemic has been a contributing factor in the shortage, but it is not the main cause, Tim Harris, general manager at Northside Automotive in Summersville, told CBS FOX 59.
"There was a fire at one of the major suppliers caused... basically wreaked havoc on it," Harris said, referring to the fire at Japanese chip maker Renesas Electronics' plant this past spring.
Experts also have blamed the microchip shortage on poor planning, trade sanctions and mobile phone rollouts, but the global COVID-19 pandemic has played a big role, TechRepublic reported in May.
"Demand for cloud computing services from providers like AWS, Microsoft Azure and Alibaba continues to skyrocket," Forrester Vice President and Research Director Glenn O'Donnell warned in an April blog post. "They buy lots of semiconductors."
This means the auto industry is competing with laptop, mobile phone, video game console manufacturers for that tight supply of microchips.
West Virginia auto dealerships aren't alone in addressing the microchip shortage. The Consumer Price Index for used cars and trucks continues to rise sharply, according to data released by the U.S. Bureau of Labor Statistics earlier this month. The index for used cars and trucks across the nation went up 7.3% in May, which accounted for about a third of seasonally adjusted increases for all items on the index.
Some strategies adopted by auto dealers to keep business going include cold-calling customers, trying to purchase used vehicles and leaving out high-end features, Bloomberg reported in May. Nissan isn't including navigation systems in thousands of its vehicles, and Ram isn't offering standard intelligent rearview mirrors in its 1500 pickups, according to the Bloomberg report.
"It has been a struggle, to say the least. Inventories, as you can see, have been the result," Harris told CBS FOX 59.
Northside Automotive is relying heavily on used cars to meet demand, General Manager Stevie LeRose told CBS FOX 59. “We would purchase vehicles from customers and try to help our inventory that way,” LeRose said.
LeRose and Harris both said they are hoping things will pick up as microchip manufacturers recover and start meeting demand across industries.
"There is some hope in the future. Manufacturers talk a little bit about easement; they have made adjustments as well," Harris said, according to CBS FOX 59.
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