Chip shortage drives car price increase

If you’ve been shopping for a new or used car in the Hudson Valley recently, you may have noticed a diminished selection and higher prices. The reason is a global shortage of semiconductor chips, an important part in a modern car. The overseas factories that make them switched over to consumer electronics when new car purchases dried up at the beginning of the Covid-19 pandemic. But demand recovered faster than chip manufacturers could keep up with and, as a result, the supply of new cars is limited. This, in turn, has pushed up the cost of the average used car by $5,000 over this time last year ($20,942 to $25,410) according to

“Sooner or later the used-car markets will have a shortage as well,” said Bob Siracusano, owner of Sawyer Motors in Saugerties. “Sometimes we have to go to an auction. There’s normally 1000 cars to pick from. Now there’s only 150.”

Sawyer Motors typically carries 200 new cars; now it has around 10. So in an effort to keep business flowing, they’ve done more presales than ever before. “When a customer comes in, we tell them what we have coming [and] what colors, and [then] they pick out a color as soon as that car comes in,” said Siracusano. “So if we have 50 cars coming in next month, I bet 30 were already sold.”


On the plus side, Siracusano said some banks and leasing companies have made an effort to help by extending leases a few months longer to prevent even more new-car consumers.

He said car makers will be ready when the production of chips ramps up.

“Ford and [I believe] Chrysler are just starting to stockpile some vehicles that are waiting for chips,” said Siracusano.

But so far, there’s no indication of when the global chip shortage will end. As a result, car manufacturers, including Ford, Toyota, and Nissan, have announced they’ll reduce production of new vehicles this year, keeping supply lower than normal well into 2022.