RICHMOND, Va. (WRIC) — Buying a car has been a bumpy road. Congress just approved a long-awaited investment that’s expected to smooth things over but relief won’t come overnight.
In the first five months of 2022, sales of new consumer cars and and trucks were down 25% in Virginia compared to the same time period in 2021, according to a review of S&P Global Polk registration data by Cox Automotive Analysis.
The problem has largely been driven by a shortage of semiconductors, which are also called chips, according to Ralston King with the Virginia Automobile Dealers Association. King said just one car could have 150 chips, which enable functions from heated seats to navigation services.
For well over a year, the shortage has had a noticeable impact at Richmond Ford Lincoln. King said the dealership would normally have 300 new cars and trucks on the lot but, currently, they’re down to roughly 20.
King said customers across the country are often waiting months to get behind the wheel of a new car or choosing to spend more money on a used one.
“We’re urging customers to have patience. It’s not the manufacturer’s fault. It’s not the dealer. This is just a supply issue that hopefully we’ll be able to come back from,” King said.
Senator Mark Warner, who led legislation to address the problem in Congress, said U.S. chip production has dropped off significantly over the years. He said America manufactured about 37% of semiconductors in the mid-1990s, compared to about 12% today.
Warner said Congress is putting $52 billion towards boosting chip manufacturing and research. When it comes to innovation and technology, he called the legislation “one of the most significant pieces of legislation that the Congress has gotten to the president in years, if not decades.”
King said it should reduce the risk of another severe supply chain disruption.
“Lawmakers are realizing we can’t be caught flat-footed again because, if we have another pandemic or we have some other catastrophic issue, we can’t be relying on other countries to produce these chips,” King said.
Warner’s main fear is that major competitors, especially China, could cut off its chip supply, triggering a national security threat that would impact much more than cars. Warner said chips are also a critical component in phones, laptops, washing machines, medical devices and military equipment.
“We would not have a recession, we would have a depression,” Warner said.
As for the car business, Warner said the bill is a step toward fuller lots and lower price tags. He said it will send a signal to the market to boost production.
“Signing this legislation won’t solve this problem overnight. It will send a signal to the market that America will be back in the game,” Warner said.
Warner said the U.S. needs at least a dozen more chip manufacturing facilities to regain control over the supply chain.
Senator Tim Kaine is hoping to see another one in Virginia. The state already has one of these facilities in Manassas.
“There’s opportunities for expansion, but there’s also other sites in Virginia that could be very well-suited as America reclaims leadership in an industry that we once led, but that, sadly, other nations over the last 25 years have moved ahead of us,” Kaine said.
