US car sales slump, stalled by shortage of computer chips in cars

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US car sales slump, stalled by shortage of computer chips in cars

DETROIT (AP) — In a typical month before the pandemic, Con Paulos’ Chevy dealership in Jerome, Idaho, sold about 40 new vehicles. In September there were only six. Now he has nothing new in stock and every car, truck or SUV has been sold to order.

What happened last month at his dealership, about 115 miles (185 kilometers) southeast of Boise, was repeated across the country as plant closures due to a worsening global shortage of computer chips hampered deliveries of new vehicles in the US.

New car sales in the US fell about 26% in September as chip shortages and other interruptions in parts supply curtailed selection on dealer lots and prices rose again to record levels. That sent many frustrated consumers to the sidelines to wait for a deficit that has hampered the industry since late last year.

According to Edmunds.com, automakers sold just over 1 million vehicles during the month, a figure that includes estimates for Ford and others who didn’t report numbers Friday. September was the lowest sales month of the year, Edmunds said.

For the third quarter, sales were 3.4 million, down 13% from the same period a year ago.

Automakers reported pretty bad numbers on Friday. General Motors, which only reports quarterly sales, said its deliveries were down nearly 33% from July to September last year. Stellantis, formerly Fiat Chrysler, saw quarterly sales fall 19%, while Nissan sales fell 10% this quarter.

Honda’s US sales fell nearly 25% last month and were down 11% for the quarter. At Toyota, sales fell by 22% in September, but by just over 1% in the third quarter. Hyundai reported a 2% decline in sales last month, but an increase of 4% for the third quarter. Volkswagen’s sales fell 8% in the third quarter.

“September results show that there are simply not enough vehicles available to meet consumer demand,” said Thomas King, president of data and analytics at JD Power.

The average sales price of a new vehicle hit a record $42,802 last month, breaking the old record of $41,528 in August, JD Power said. The average price in the US is up nearly 19% from a year ago when it first broke $36,000, JD Power said. Car price increases have pushed up US inflation.

However, General Motors, which was hit hard by temporary plant closures last quarter, expressed some optimism. Steve Carlisle, president of GM North America, said the computer chip shortage is improving.

“Looking at the fourth quarter, a steady stream of vehicles held in factories will be released to dealers, we’re restarting production at key crossover and auto plants, and we’re looking forward to a more stable operating environment through the fall,” he said in a statement.

The shortage and insanely high prices for both new and used vehicles started with the outbreak of the pandemic last year, when many states issued stay-at-home orders. Prices plummeted and automakers closed factories for eight weeks. The resulting drop in supply came just as many incarcerated consumers wanted a new or used vehicle to commute to work or take car rides without interacting with others.

While auto plants were closed in April and May last year, computer chip manufacturers shifted production to meet the huge demand for laptops, gaming devices and tablets. That created a shortage of automotive-grade chips, a problem that may not be fully resolved until next year.

Due to the high prices, dealers large and small are reporting record profits, but Paulos fears those days may be over. He pays the bills and makes money selling used cars, as well as service because people keep their vehicles longer. He hopes the new car shortage has bottomed out and says GM looks to be bringing more factories back online.

“We won’t have an inventory to show people here,” Paulos says. “If we don’t supply the dealers, I’m afraid the record profits we made will turn into record losses. It’s hard to sustain yourself without fresh power.”

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