Nevada Franchised Auto Dealers Association

6 BUSINESS VIEW MAGAZINE VOLUME 9, ISSUE 2 and begin the long path to recovery with sales beginning to normalize towards the end of the third quarter. However, other pressures outside of our dealers’ control began to build which have proven to be almost as challenging as what we faced during springtime of 2020. As more people began working remotely and students handled their schooling from home, demand for consumer electronics skyrocketed. Coupled with automotive factory shutdowns, semiconductor manufacturers (having had to shut down production due to COVID as well) shifted their focus to satiate the rising need for items like computers and smart TVs and reduced and/or eliminated the manufacturing of common chips used in the automotive space. Further, a fire at a Japanese factory which supplied approximately 30% of the chips used in vehicles caught fire, resulting in a massive disruption in this vital link of the supply chain. A lack of chips has resulted in an unprecedented decline in vehicle production across the globe. According to AutoForecast Solutions, Inc., roughly 10.2 million vehicles were eliminated from production schedules in 2021 alone. The result of the “chip crisis” has depleted inventories for new vehicle dealers across the land. All that one has to do in order to observe this unprecedented problem is to drive to a dealership and observe empty lots which are historically filled with new vehicles. Countless dealerships are operating with less than 10% of normal inventory levels with many oftentimes not having a single new vehicle available to sell. Industry experts predict that we would not see production and inventory levels begin to improve until mid-2022, with normalization likely not occurring until the first quarter of 2023. With consumer demand for new vehicles at levels we haven’t seen for decades and supply numbers that haven’t been this low since the great recession, prices for vehicles – new and used – have skyrocketed. This has helped to somewhat NEVADA FRANCHI SED AUTO DEALERS ASSOC I AT ION

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