Teche Area car dealerships hit hard by inventory shortage

Following a year’s worth of factory shutdowns and closures, the automobile industry has been hit hard the last few weeks by a lack of vehicle inventory, and some local dealerships are voicing their concerns.

One of the driving factors of the current car shortage has been a nationwide and even worldwide shortage of vehicle parts. From engines to bumpers all the way to car chips, each part plays an important function in the car’s production.

According to the Detroit Free Press, silicon chips play a crucial role in the performance of the current collection of cars. The chips, which are tiny transistors made from silicon materials found in most minerals on the earth’s surface.

These electronic chips allow computers, cell phones and other devices to function as well as vehicles.

The BBC reports that chip’s raw materials come from manufacturing business from parts around the world including Japan and Mexico and the chips themselves are made in Taiwan, China and some parts of the U.S., part of a $3 trillion global industry.

Because of the shutdown of factories due to the COVID-19 pandemic last year, production on those chips as well as other parts to a vehicle halted and with the world slowly going back to normal, there is a backlog of inventory that needs filling. But no one to fill it.

New Iberia business owner Preston Hull of Sugar Land Auto Sales said the shortage of inventory for cars comes down to simple economics: Supply and demand.

Supply and demand, in economics, according to Encyclopædia Britannica, is the relationship between the quantity of a commodity that producers wish to sell at various prices and the quantity that consumers wish to buy. In equilibrium the quantity of a good supplied by producers equals the quantity demanded by consumers.

“Demand is high, supply is low,” Hull said. “It’s about that simple.”

Hull has been in the industry for 31 years, as both a salesman and an owner and during that time, he has just about seen and done it all — but nothing quite like this.

Just recently, Hull purchased a couple of cars that he was planning on making a trip to get them in Mississippi, but at a much steeper price than he would normally pay for cars.

“You have to pay top dollar for a good car because it’s a free enterprise system,” Hull said. “But it’s all relative, because you can get twice as much for your trade-in.”

A prime example of the market right now: Hull noted that a 2003 Chevy Avalanche went for over $18,000 at a recent auction.

“An 18-year-old vehicle that should have sold for seven thousand, sold for fourteen thousand.”

That increase in price is just the tip of the iceberg for the vast ocean in the automobile industry.

According to Kelly Blue Book, one of the top automobile industry price guides in the U.S., the total supply of new vehicles available to sell nationwide fell 43 percent below last year’s level at the same time, and 54 percent below similar numbers from 2019, before COVID-19 lockdowns began.

Bigger dealerships in the area like Arceneaux Ford also have seen lower than normal inventory numbers for their used cars.

Doug Boutte serves as the sales manager for Arceneaux Ford in New Iberia and like every other car dealership across the country, Arcenaux has struggled to maintain its stock. Compared to what they’ve had in the past, Boutte and Arceneaux Ford are down a significant number as well.

“You’re down 120 cars down versus you only have 30 in stock or less,” Boutte said.

According to Boutte, Arceneaux Ford is down about 80 percent of its normal inventory since April of this year. He anticipates the car industry to bounce back by December of this year.

While the market is scary right now for those in the car industry, the market will get back to normal, the workers and the factories will start up again. It’s just a matter of when and not if, he said.