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Get the most bang for your buck as automobile industry suffers supply shortages

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Posted at 9:52 PM, May 10, 2021
and last updated 2021-05-10 23:12:10-04

CLEVELAND — Ford is extending shutdowns at several assembly plants nationwide because of an ongoing global semiconductor shortage.

“What you have is the disruption in supply chains. There's a supply-side story here and there's a demand-side story,” economic expert Bill Kosteas said. “For most of us, I don't think we've experienced the kinds of disruptions on a wide scale that we're seeing today.”

The Ohio assembly plant will continue to produce only Super Duty chassis cabs and Medium Duty trucks through the week of May 17 and will be down the week of May 24.

While several industries have been hit hard by the manufacturing shortage, the automobile industry, in particular, has suffered in several ways.

“A lot of manufacturers have produced vehicles that are missing certain components. They're produced, but they're not completed,” Louis Vitantonio said. “One issue is reflective of the other. If we have no or limited use of new car inventory, your used car inventory is also going to be tight.”

The shortage caused by the pandemic resulted in a major slowdown in the production of new vehicles.

“What you're seeing here when you have these disruptions is when supply and demand get out of, as an economist would say, out of equilibrium,” Kosteas said.

Customers looking to buy both new and used vehicles are experiencing the domino effect of distress.

“If you need an alternative to finding a new vehicle, you're going to look to a late-model used vehicle,” Vitantonio said. “If you're looking for a used car, you just have to be selective. You may have to take something that you may not necessarily want temporarily or you're going to have to wait and be patient.”

Experts told News 5 that used car dealerships are struggling to maintain inventory minimums.

“If you don't absolutely need to get a new car now, you might want to wait and hold off if you can to see prices come down,” Kosteas said.

Additionally, the travel and tourism industry has not been unscathed by the shortage.

“It's had a tremendous impact on the car rental industry. Last year at this time, you saw rental car usage plummet by about 90 percent nationally due to the pandemic,” travel expert Amir Eylon said. “Right now, consumers looking for rental cars, they can expect to pay a little bit more.”

Eylon said when travel demands picked up around spring break, the industry was forced to play catch-up.

“A lot of the rental car companies had a lot of idle inventory, so to raise cash and to keep lower overhead, they sold off a lot of their fleets,” Eylon said. “These rental car companies then found themselves with a much greater demand than forecast and typically they would just buy more cars, but there's not enough inventory to catch up with the demand.”

Vitantonio said he anticipates a fluctuating market through summer.

“You can't get a better trade-in value than you can get today, but inventories will be tight for probably May, June, and a little bit into July,” Vitantonio said.

Economic experts recommend weighing the pros and cons before making any major purchases during pandemic uncertainty.

“Try not to panic if you can manage it,” Kosteas said. “If you're in a position to kind of hold on, do so.”