On October 20, 2020, a terrible three-day fire broke out in a factory in an industrial town in Japan, thankfully with no loss of life. Remarkably, this far-away disaster from a few months ago impacts your current ability to purchase a new car in the Pacific Northwest.
New motor vehicles contain dozens of microchips in their increasingly complex electronically controlled design. The fire-damaged factory, Renesas, is one of the car industry’s largest manufacturer of computer chips. With car component factories already producing diminished output during the pandemic, the result is a reduced number of new vehicles coming out of car manufacturing plants and therefore, a reduced inventory of new cars for sale. With less new cars for sale, prices have increased, driving many buyers to used vehicles, which in turn reduced the supply of used cars and drove up their price.
People looking for cars find the prices absurdly inflated at this time. Even used car rentals are affected because companies must reduce new inventory. In my town, a car that rented for $25 a day is now up to $100 a day. Owners of cars in need of major repairs find that dealers often have no loaners available, and car rentals at $100 places them in a tough spot of having to decide whether to incur this high cost or to delay the repairs and drive a defective vehicle.
If you are in the market of a new or used vehicle, flexibility and shopping around is more important than ever. Maybe now is not the time to be fixated on a particular dream car, or you might have to pay dearly for it until things go back to normal in a few months.
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