Edmonton

Buying a car? Thanks to global chip shortage, they are harder to find in Edmonton

A shortage of semiconductor chips — microchips used in electronics, household appliances and cars — continues to limit new vehicle production during the COVID-19 pandemic.

Local dealers say limited new car production is driving up demand for used vehicles

Coliseum Cars & Trucks owner Miller Shebli says used vehicles have been difficult to find during the pandemic. A global semiconductor chip shortage, which is restricting new car production, is to blame. (Miller Shebli)

Near-empty dealership lots and advertisements asking Edmontonians to sell their used cars are symptoms of a global problem plaguing the automotive industry.

A shortage of semiconductor chips — microchips used in electronics, household appliances and cars — continues to limit new vehicle production during the COVID-19 pandemic.

"Because there's not a lot of new vehicles coming in through the pipeline, that's driven the price of used cars, quite frankly, through the roof, and the demand for them has gone up exponentially," said Gerald Wood, president of the Motor Dealers' Association of Alberta. 

Edmonton-area dealers told CBC News this week that inventory remains lower than ever, but they expect the situation to improve in the coming months.

"We're getting reports that there should be backfill coming and we'll see that inventory start to build again," Wood said.

'Empty parking lots'

Like many car dealerships in Alberta, Sherwood Ford has a smaller inventory than usual, due to a global shortage of semiconductor chips. (David van der Leek/Sherwood Ford)

Because of the chip shortage, Sherwood Ford, a dealership in Sherwood Park, has a vehicle inventory of between 15 and 20 per cent of its normal size, according to president Mark Hicks.

Most of those cars are parked at the dealership, which is unusual. In a normal year, hundreds could be stored off-site at a property half a kilometre away, so as not to overwhelm consumers with choices.

At other shops, the situation is worse, Hicks said. While driving on Monday, he noticed many smaller franchises with even fewer vehicles available.

"I saw stores with hardly any inventory at all, basically empty parking lots," Hicks said. 

New cars await chips

Dealers say automakers like Ford are producing and temporarily storing tens of thousands of vehicles without chips in the United States. 

Once they receive the crucial components, which are used to power features like touch screens and power steering, the cars will be distributed via rail throughout North America, Wood said.

Hicks said his dealership is waiting for 400 such vehicles, which he hopes will arrive in the next six-to-seven weeks.

In the meantime, dealers are placing more factory orders and encouraging Edmontonians — via advertising — to part with used cars they no longer need.

Higher prices

Dealers say cars may be hard to come by, but they are available — and they will cost you.

"Honestly, vehicle prices have been going up, just because of the shortage," said Miller Shebli, who owns Coliseum Cars & Trucks in central Edmonton and specializes in selling vehicles under $10,000. 

Through contracts with dealerships, hunting on Kijiji and sourcing cars from other provinces, he said he has been able to move about 30 vehicles per month.

As the economy reopens, trucks, he said, are especially in demand and in short supply.

"It's hard to find a truck nowadays for even five grand, that's clean, that's not going to break down on you," he said.

Ramping up production

Teledyne Micralyne, which manufactures microelectromechanical systems in Edmonton, faces some of the same supply-chain problems as the semiconductor chip industry. (Brenda Petersen/Teledyne Micralyne)

Automakers typically shut down their plants for periods of time in the summer, but Wood said companies are continuing to operate at a reduced capacity in order to catch up with increased vehicle demand.

Chip manufacturers are also increasing production, but industry experts say the problem could persist for months.

"I expect it to get better in the first half of 2022," said Steve Bonham, Edmonton plant manager for Teledyne Micralyne, which makes microelectromechanical systems (MEMS). 

MEMS manufacturers depend on some of the same equipment and materials (like silicon wafers) used by semiconductor chip manufacturers, so they are grappling with similar supply-chain problems.

Bonham said wafer suppliers are expanding their businesses and increasing availability, which should help industries that require those materials.

With files from Kory Siegers

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