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Global chip shortage has local impacts for car dealers, auto makers

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ROCKFORD (WREX) — The pandemic has had an impact on every facet of our lives, and now it's effecting the automotive industry.

Your car likely has a microchip that runs its computer, but a global shortage in chips is halting the production of new cars and that's having local impacts.

"Every model and manufacturers has chips in it," Charles Hansmeyer, the General Manager at Lou Bachrodt AutoMall, explains. "Technically, a vehicle won't run without the chip."

Hansmeyer says in the midst of the pandemic, many manufacturers slowed or stopped making cars, which has disrupted the supply chain.
And then, demand skyrocketed.

"A lot of manufacturers, including automakers, didn't foresee that they would have an explosion of sales," Hansmeyer says.

Hansmeyer's overall car inventory, like many dealerships in the stateline, is down.

Right now, in total, he's got 500 cars on the lot.

We asked him, if there wasn't a chip shortage, how many cars would you have?

Hansmeyer said between 700 and 800.

Though down, it's not dire at Lou Bachrodt because three months ago, the dealership bought more cars to make sure it could meet the increasing demand.

So, we reached out to one local manufacturer, the Belvidere Assembly Plant, to find out how long before production restarts.

In a statement, we're told it'll be shut down through late-May. It's the third time the chip shortage has forced the plant to push back reopening since it first halted production in late-March.

And while the new car market has been hit hard, the used car market is flourishing.

"The used car market is the highest it's ever been, trade-in values are the highest I've ever seen in the 30 years I've been doing this," Hansmeyer says. "Customers are looking at used cars now when, before, they weren't looking at a used car."

It's a solution for consumers amid a chip shortage that Hansmeyer says may have effects that ripple until September or October.

In addition, Hansmeyer says some manufacturers are taking chips out of less popular cars.

"What manufacturers are doing is, they're taking the chips out of less selling vehicles, sedans, coupes and they're taking those chips and they're putting them in high demand pick-up trucks [and] SUVs to meet market demands," Hansmeyer explains.

Richard Bodee

Richard Bodee is a reporter at WREX. He joined the 13 WREX team in June 2019 after graduating from DePaul University with a Master’s degree in broadcast journalism.

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