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Understanding the Automotive Chip Shortage


The automotive chip shortage has been plaguing the industry for over a year now, leading to fewer new vehicles in car dealerships worldwide. The car chip shortage can affect the variety you have when purchasing a new vehicle. Semiconductor chips can be found in many of the products we use every day, including smartphones and washing machines. With the COVID-19 pandemic accelerating demand for home electronics, production of these semiconductor chips has not been able to keep up!

The increase in demand and lack of supply ultimately led to the automotive chip shortage, and it’s affecting many industries worldwide. Although the car chip shortage is difficult for the industry, there are various signs that the issue is beginning to improve. If you’re looking for a new vehicle in the Madison area, you can be sure that the experts at Badger Truck & Auto Group will do everything in our power to connect you to a model that meets your needs. Just take advantage of our vehicle finder service, and tell us what you’re looking for today!

Why Is There a Chip Shortage?

So, why is there a chip shortage? The car chip shortage is due to a lack of supply and increase in demand for products using semiconductor chip technology.

  • When supply couldn’t meet demand, products that required a chip to function properly either slowed or stopped construction completely.
  • Furthermore, these products experienced a significant increase in price due to the shortage.
  • Although there are many products that are sold in the Chicago area that use semiconductor chips, the automotive industry has borne the brunt of the shortage.

Another reason for the car chip shortage is the sheer length of time it takes to manufacture a semiconductor chip:

  • Each chip must be manufactured in a sterile environment without any risk of dust or debris.
  • Since these chips are extremely small, great care must be taken to build each chip.
  • Additionally, worldwide restrictions resulting from the coronavirus pandemic have prevented the factories that make these chips from operating at full capacity.

These factors combined are to blame for the car chip shortage, and the automotive industry will continue to feel the effect until manufacturing can pick up again.

How is the Car Chip Shortage Affecting New & Used Vehicle Inventory?

The automotive industry is affected the most by the semiconductor chip shortage because modern vehicles require a large number of chips in order to function properly. Since this chip shortage has forced manufacturers to cut back or slow production, the car chip shortage has limited the amount of vehicles available at dealerships worldwide. Also, new vehicles that are being produced are coming in at a higher price tag.

Used vehicles have also been impacted. Due to the scarcity of new vehicles, many dealerships are turning towards used cars to fill their inventory. The cost of used vehicles have also increased from 20% to 30%.

Although this may come as a disadvantage to car shoppers, it could benefit you if you are trading in your vehicle, as you’ll likely get higher offers.

How Much Longer Will the Car Chip Shortage Last?

There is light at the end of the tunnel, as the car chip shortage is already improving, and things should get back to normal in the not-so-distant future. This is due to increased vaccination rates and loosened restrictions, allowing chip manufacturers to return to pre-pandemic production levels. There should be more vehicles available for sale as supply begins to meet demand, and prices should decrease.

Are Cars Still For Sale at Badger Truck & Auto Group?

Yes! You can certainly still buy a new or used vehicle at Badger Truck & Auto Group to elevate your drives around Waukesha! We’re going above and beyond to ensure there are enough vehicles for our valued customers. You can check out the vehicles we have in our inventory, and decide which ones are the best for your lifestyle.

Come Buy Your Next New or Used Vehicle at Badger Truck & Auto Group!

Now that you know more about the automotive chip shortage, you’ll be more informed about what exactly it means for the industry. However, you can still stop by Badger Truck & Auto Group to find your next vehicle. Check out our new vehicle inventory, and meet with our finance center to start the buying process!

Our New Inventory

Our Used Inventory

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