When Brad Howell looks out his office window of his Ford dealership on East Boulevard, he’s used to seeing nothing but vehicles.
Now, he sees hardly anything but blacktop.
That’s because the worldwide semiconductor chip shortage has put a massive kink in the auto industry’s supply chain that has nearly halted the arrival of new cars and trucks at every dealership in Kokomo — and the entire country.
Howell said they normally have up to 110 new vehicles on the lot that are ready for sale. Now, they have 17.
And that number is likely to go even lower. He said that for the first time ever, they will have no new inventory arriving in June.
“It’s pretty severe for us,” he said. “I’ve been at this 35 years. We’ve seen ups and downs, but I’ve never seen anything quite like this.”
It’s the same story at Kokomo Honda and Kokomo Toyota, which are owned by the same dealer. New car sales manager Chris Scott said that for the first time, they also didn’t receive any new inventory from Honda this month at the dealership located on South Lafountain Street.
But low inventory doesn’t mean low sales.
Scott said the dwindling inventory on the lot means demand has skyrocketed for vehicles, especially trucks. In fact, many of the trucks are already sold before they arrive at the dealership. Those that do make it to the lot are sold in around three days. During a normal year, it usually takes on average three months to sell a truck like a Toyota Tundra, he said.
Paul-Richard GM Center in Peru has also had better-than-average sales despite the fact that their usual inventory of up to 90 vehicles has shriveled to just 12.
Tom Gaddy, new car sales manager at the dealership, said that like other brands, they’re selling a good amount of vehicles while they’re still in production.
He said there are cars and trucks parked at auction lots and other off-site locations around Fort Wayne that are just waiting for a microchip to be installed before customers can pick them up.
For the trucks they do get at the lot, people from all over Indiana are driving to Peru to call dibs before someone else does. Gaddy said someone from Frankfort was at the dealership Saturday to purchase a Trailblazer. They even sold a truck to a person in New York.
“I almost hate to say it, but over the last year and a half, our business numbers have been up,” he said. “During all this, we’ve never had to lay off anybody or seen any shortages in sales. We’ve been doing well.”
But that’s not the case at many used-car lots in Kokomo. With fewer new vehicles arriving, new-car dealerships are holding onto many of their used cars or trade-ins instead of sending them off to auction.
Jamey Boruff, owner of Bob Boruff Auto Sales on East Markland Avenue, said that for dealerships like his that depend on those auctions to restock inventory, the slim pickings there has made it hard to find decent used cars at a decent price.
He said the low inventory has driven up prices at auctions to the point where some vehicles are selling at retail.
“The inventory is down, the quality of vehicles is down, but the prices are skyrocketing,” Boruff said. “These cars are bringing way more than they should.”
Now, instead of going to one auction and picking five or six cars, Boruff is going to three or four auctions a week just to land a handful of used vehicles at a reasonable price. He’s even buying cars located up to 600 miles away from online auctions and paying the shipping fees to get them to Kokomo.
“We’re exhausting every resource to purchase cars,” Boruff said. “The chip shortage is directly affecting every dealership, whether its new or used.”
And although sales at new-car dealerships remain solid, a darker forecast may be looming on the horizon.
Ford dealership’s Howell said the fact they’re not getting any new inventory in June doesn’t bode well for what’s to come.
“Our numbers are about as good as they’ve been, but now that they’re not shipping anything, I think the next two or three months will be considerably worse,” he said.
Toyota manager Scott said they also anticipate to feel some financial pain as the inventory crunch gets worse as the chip shortage drags on. He said for now, they’re hoping to muster through until the inventory supply chain gets back to some kind of normal.
“We’ll get to the point where we’re squeezed pretty tight,” he said. “We’re hoping we can do average sales over the next few months until inventory gets back up, then kick into high gear.”