Computer Chip Shortage Powers BHPH Auto Dealer Profits… But Also Greater Risk!

The impacts of the Coronavirus pandemic continue to be felt in our world and this couldn’t be more prevalent than with the global chip shortage that has impacted a variety of industries but specifically the automotive industry.

This shortage, while stemmed from the pandemic, can also be accredited to poor planning along with the release timing and demand for various high-end cloud computing services and mobile phones. Which, unfortunately for those in the automotive industry, takes priority over the automotive landscape. Not a great combination for an industry with an already fragile supply chain.

This ripple effect of chip shortages has put a major strain on used car inventory levels and increased the cost of each vehicle. As a matter of fact, in 2021 the average price of a used car has risen over 27% from the previous year!

These price increases have had a direct impact on the number of loan defaults with those riskier buyers struggling to match the increased prices, despite continued economic support from the government. A whopping average of 5,418 repossessions every day have occurred in 2021 thus far, only further highlighting the problem at hand and the importance of being able to successfully recover your collateral with a GPS tracking device.

Calling it soon might be playing it too safe. As mentioned prior, this dilemma likely could have been avoided through better planning. With the automotive industry acting in a just-in-time manner with these parts, the shortage might be around longer than we hoped. Even when these chips begin to move in the supply chain, it could take months for them to reach the end product due to the vast inefficiencies that are present.

Experts in the industry suggest there is no short-term solution. Gaurav Gupta, a vice president analyst at Gartner, states “if supply is constrained you can’t increase it in a short timeframe …. We’re looking at the second quarter of next year”. Until then, those in the entirety of the auto industry will see prices continue to rise.

For those in the auto-lending/Buy Here Pay Here industry, utilizing a GPS tracker paired with an all-encompassing dashboard can provide you the peace of mind you deserve during these times of high prices where payment performance is destined to be questionable.

CallPass has been helping used car dealers secure their collateral with our GPS tracking solutions for over 15 years! The Quick Device and iGotcha GPS platform come feature-packed with all the tools needed to streamline your collection efforts and allow you to secure your profits! Schedule a hassle-free demo and learn more about how you can operate with the peace of mind you deserve.