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Microchip shortage leads to higher prices, delays in new car market

KPHO Phoenix logo KPHO Phoenix 6/10/2021
a car parked in a parking lot: All this has made the used car market red hot. © (Source: 3TV/CBS 5)

All this has made the used car market red hot.

TEMPE, AZ (3TV/CBS 5) - When the world started working remotely, demand for semiconductors -- also known as microchips -- went way up. They're the brains inside your phone, your computer and even your car. "Some of these cars have over 100, 150 chips in them," said John Chavez, sales manager at Tempe Kia.

As tech companies struggle to keep up with that demand, the chip shortage has trickled down to carmakers. "We've got manufacturers that are producing cars just far enough along to where they need the chips and then they'll complete them," Chavez said.

Kia normally makes about 50,000 vehicles a month, but demand is so high the company sold about 70,000 cars last month. That just means there's a big wait for the customers, who are sometimes paying $7,000-$10,000 above sticker price without having test-driven the car they plan to buy.

"They're just taking their neighbors and friends' words for it that it's a great car and they're putting some money down knowing that it could be six months before they get that vehicle," Chavez said. "As long as I've been doing it, I've never seen anything like it. We just shake our heads and just wonder when it's gonna get better."

All this has made the used car market red hot. Ryan Kort was two years into a three-year lease on his 2019 truck when he traded it in. "They came in. They gave me 10 grand more than what I even owed on it. I was only two years into my lease, which is just crazy," he said.

He was able to walk away with a newer used car, and extra cash in his pocket. "We always know that vehicles are going to depreciate. You're never expecting to get money back after having it for a couple years and putting miles on it and using it, so it was a shock, for sure," Kort said.

If you're hoping for a new car, Chavez says Kia is looking for things to get back to normal in the fall. "Be a little bit patient and if you're patient, you'll get what you want, but it's just gonna take a little more time to come in this time around," he said. Just remember that with such low supply, haggling on the price probably won't do you any good.

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