This article was previously published May 19, 2021 on the Fredericksburg Standard-Radio Post website here.

As the U.S. economy makes a comeback following the coronavirus pandemic, a microchip shortage is leaving the parking lots of many car dealerships empty.

The computer chip, also called a semi-conductor or integrated circuit, is the brain of any new vehicle, but it also powers more than the car industry. The chips play a key role in most, if not all, electronics that are used on a day-to-day basis.

From video game consoles to smartphones, dishwashers to electronic toothbrushes, the chip shortage is affecting far more than just automakers.

When people drive by empty car lots, the shortage’s effect on car dealerships is becoming more and more apparent to the consumer.

Kenny McCarty, dealer principal and owner of McLane Ford of Fredericksburg, said that many vehicles made by Ford are going straight into storage to await the microchip needed to be complete.

Supply

“We normally keep 110 vehicles — to put that into perspective, we normally keep $5-$7 million worth of inventory and that’s our sweet spot, so to speak,” McCarty said.

“We sell 60 to 80 a month so 110 vehicles is about a 60-day maybe 50-day supply. As long as things are continuing to come out of the plant, we’re good at that amount.”

As of Thursday, McCarty said after making deliveries, there was about $298,000 worth of inventory on the lot. That’s five vehicles.

“That’s probably not going to get better for two to three weeks, and probably not going to be recognizably better until the end of June,” McCarty said.

During the height of the COVID-19 pandemic, factories shut down and demand for smaller devices that use microchips increased.

Even in 2020, McLane Ford had an increase in sales from the previous year. At the time, Ford had enough resources to meet the high demand; however, manufacturers had to decide how many chips would be needed months ahead of time.

“Everything we do is six months ahead, and they underestimated the demand,” McCarty said.

Demand

Even with the significant decline in supply, car dealerships like McLane Ford continue to make sales. McCarty said they have about 80 retail orders — not including the 65 retail orders for Broncos.

“We’ve got people coming in every day and ordering vehicles, not knowing how long it’s going to be but its vehicles that we know are going to get built,” McCarty said. “Demand is high anyway, and it has not changed.”

McCarty said the pandemic may have caused a “pent up demand” for car shopping.

Because of the lack of inventory and a continued high demand, some dealerships are selling their limited inventory at much higher prices.

Even with a positive outlook, McCarty is still facing a disruption to the industry like no other.

“I’m not going to sit here and tell you that I don’t have some sleepless nights, but we’re working on it. We’re going to be fine,” McCarty said. “I just don’t want anybody else having a sleepless night.”

Several dealerships throughout the U.S. are shifting their focus to selling used cars during this time, which is driving those prices up as well.

But the market for used cars is still small in comparison in Fredericksburg.

“We are truly blessed to be in Gillespie County, we are truly blessed to be in Fredericksburg,” McCarty said.

Fredericksburg Chevrolet Buick GMC and Crenwelge Motor Sales, Inc. were also contacted for this article, but neither responded in time for print.