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Microchip Shortage Improving, Leads to Better Inventories at Texas Car Dealers

Thinking of buying a vehicle for the holidays? There are several things to keep in mind before you shop

NBCUniversal, Inc.

If you're looking for a new ride, the holidays and the end of the year are the biggest times to buy a car as dealers make room for next year's inventory.

Experts say record-high car prices might come down a little but consumers shouldn’t expect drastic deals on new or used cars any time soon.

During the height of the pandemic, most car dealer lots across North Texas looked like empty parking lots.

But Hector Lebron, general manager of Clay Cooley Nissan, said inventories are starting to come back to life again.

More cars mean more options and the ability for a customer to negotiate better deals – depending on the dealership.

β€œYes, there are still deals. Deals have always been out there in existence. The only difference is that you're going to be paying more for the value of money,” said Hector Lebron a long-time car expert and general manager for Clay Cooley Nissan in Irving. β€œIt's non-negotiable because the fed has raised the interest rates."

As the fed tries to raise interest rates to combat inflation, the move is affecting car loans. That's in addition to record high prices for new and used cars, which soared during the pandemic.

Manufacturing plants in key countries such as China and Taiwan – where long COVID-19 lockdowns stopped production – lead to a microchip shortage for new cars, which then caused low inventory across the world. This pushed buyers, who were looking for anything, to snatch up used cars. The entire vehicle market was thrown into flux.

But chip manufacturing plants around the world have slowly recovered from the mayhem of the pandemic.

In fact, General Motors – which builds full-sized SUVs like Tahoes and Suburbans at its assembly plant in Arlington – told NBC 5 in a statement they've seen better consistency in the supply chain this year compared to last.

β€œOverall, we have seen improvements and better consistency in the supply chain through the third quarter of this year compared to last year as a whole,” a spokesperson said. β€œThis translated into improvements in production and deliveries evidenced by significantly improved sales results for Q3 over the previous year. Generally, all of our production facilities, including Arlington are running as normal.”

But experts say other supply chain issues with parts like seats, paint resin and tires are still just enough to hurt supply. With demand for vehicles still very much strong among a consumer base coming out of the pandemic, prices have remained elevated.

"In some areas, depending on where the vehicles are coming from, which country, which region – we're also dealing with strike force in either drivers or they don't have enough of something. There's a segment that is still a little slow, if not completely solved. I see it probably resolving itself probably around the middle of the summer of next year,” said Lebron.

However, Edmunds.com is reporting an overall drop in new vehicle price tags. The car inventory website claims new vehicles averaged around $700 over sticker price in the first six months of this year. In the past month, that number dropped to $230.

Still, in October, analysts said 57 percent of all consumers were paying above sticker price. Some Land Rover, Kia and Honda models are averaging a thousand dollars or more over retail.

Lebron said the best way to offset the cost of rising interest rates is to put 10 to 20 percent down on your car. In that payment, you should include tax, title and license.

That leaves as little as possible to pay interest on.

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