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How The Parts Shortage Is Shaking Up The Used Car Market

The supply chain is affecting more than just new car inventory and used car prices. It’s also affecting the repair industry. Obviously, you’ve seen new car dealerships with empty lots, both new and used, and you’ve seen the prices of used cars skyrocket. People need their car to drive and they can’t find a new one, so they’ll pay over the book value for a used one. It’s also showing up in the repair industry. 

Repair shops and parts shortage 

Whether at a dealership or standalone repair garages are having difficulty getting vehicles back on the road because they can’t get the parts. Parts inventory is extremely problematic. There are some parts that might be on a 2-4+ month backlog. Well, what do you do if your car is off the road during that timeframe? Here’s an article from TheDrive, stating that drivers are waiting months for simple car repairs due to part supply problems. As one example from the article, it says a person was involved in a minor fender bender. He took the vehicle straight to the body shop, but the mechanic told him that they have such a backlog that they couldn’t even look at the car for a month and a half. Luckily the damage was minor and the car was still drivable a month later while the car was at the garage the parts finally made it. 

This is a common thing for collision parts and for mechanical parts. Even some electronic parts are having difficulty being sourced and the repair shops say they’ve never seen this so bad. The same article above references a 26-year veteran of the parts business. He’s a manager at a dealership/family-owned repair center and says the situation is the worst he’s ever seen, and there’s no ETA for when the parts will be available. As an example, he had a Ford F-150 sitting for four months waiting for a part. People are having to find rental cars and borrow rides from others. So what does that mean if you have a vehicle that is your main mode of transportation? Be very careful about operating the vehicle. A minor collision, if the car’s not drivable, can literally take you off the road because that part if it’s not available, can’t get fixed in a short period of time like used to be the case. Additionally, there may not be many rental cars available.

Rental car shortages

The next time you’re driving and you go past an auto rental business look for their inventory. Look specifically for Enterprise Rent-A-Car because most of the other rental companies are at airports and the other franchises like Hertz and they normally don’t have their vehicles on display. They usually have inventory staged in a back area and they have their office in a strip mall but you can’t see the cars. Enterprise Rent-A-Car is a little different, most Enterprise Rent-A-Car businesses have their vehicles in the front parking lot. 

The next time you drive by see how many vehicles are there. Try to look at that on a regular basis. What you’ll find is they may have a few vehicles in their lot occasionally, but you may drive by some days and have zero vehicles in their inventory. Do a search online to see what vehicles are available for rent. You may find that there are no vehicles or they cost upwards of $100/day. 

Why is this important for you? 

Well, your transportation is something you count on every day. Many things can take that transportation away. It could be a collision, it could be a mechanical problem, but if the parts aren’t available to fix it, you’re out of luck until they come in. We have clients that have very minor mechanical problems things as computers not working or a small brake problem and the part wasn’t available. This parts shortage has no ETA according to the article and it might actually get worse. Why is that? 

Every vehicle that’s on the road today or 90% of them are internal combustion engine vehicles, gasoline or diesel vehicles. They run on fuel from the gas station that burns up and makes the car drive. 5-10 years from now, vehicles are going to be all-electric. You’ve seen the articles and governmental support and incentives that are driving the switch over to electric vehicles. What that’s done is it’s created a transition for manufacturers. Most automotive manufacturers have taken away all new engineering and development for gasoline vehicles, all their new development is electric vehicles. The pipeline of vehicles that are internal combustion engines is evaporating. They’re not making any more. They’re not developing any new ones. Certainly, they’ll still manufacture the current version for a few years, but they’re not putting any new money into supply chains or factories for these legacy older vehicles. 

What that means is the parts are not going to be in high supply either. If manufacturers are not building the vehicles for sale through dealerships, they’re also not building a lot of extra parts. Most parts for vehicles come as an overbuild of parts that are manufactured for the actual vehicle. So if you’re building let’s say Ford F150, you build a million Ford F-150s and you might have a hundred thousand worth of vehicles with extra parts like 10% overage. So you have those parts for people that need them. If you’re not going to be building the vehicles, why build the extra parts? A lot of those parts are going to go to waste. So the manufacturers are already starting to pull back on parts production. So you may find that this parts crisis may actually get worse. 

Parts shortage outlook

In the coming years, you may find that legacy vehicles on the road right now have a parts problem that never gets solved. What does that mean for you? If you have a vehicle that’s more than 2-3 years old, you may find that in the coming years there are no parts available for the vehicle. It’s like Cuba, where cars just get parked and they never get fixed. In the 1950s, when Cuba was embargoed, no parts could go to that island. The automotive business was frozen in time. Every vehicle on the road was like a time machine. There were no new cars, they were scavenged and parts were taken from one car to another. Now it’s probably not going to be that extreme, but it may be something where parts become more difficult to get. Unlike vehicles from the fifties or sixties or seventies where you can interchange parts, there’s a lot of complexity. Parts are now very specialized so if a vehicle is from the 2000s, that part may only fit one car. So if it’s not available you may not be able to interchange it from another vehicle. 

Let us know in the comments what you think about this potential parts crisis and how it’s going to affect the usage of vehicles in the future that are currently on the road.


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