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How a microchip is hitting new and used car buyers

The supply chain has been disrupted and the affects will be felt for months more.

EAST MOLINE, Ill. — It's a common sight throughout the Quad Cities and the U.S.: slim pickings at car lots. Dealerships say they're struggling to keep new and used cars in stock.

"If you're driving around right now you're noticing that everybody is low on inventory," says Chad Dresing, owner at Green Chevrolet in East Moline. "All started a year ago, when the manufacturers all shut down their plants for COVID."

The culprit, at least for those new cars, is microchips. They're found in many parts of the car, from the radio to the anti-lock brakes, to the backup cameras. And there aren't enough being made right now.

Dresing says COVID disrupted the supply of cars because manufacturers thought people would be buying fewer cars.

"What actually happened was demand stayed pretty steady," he says. "So dealers started getting low on inventory but the factories weren't running."

As a result, the average price of a new car has gone up 10 percent in the last two years.

"It gets kind of frustrating, obviously," Dresing says. "We want to make the customer happy and get them out driving their vehicle."

Economists expect this shortage of microchips and used cars to last for months if not through the end of the year.

However, there's one silver lining here: your used car could be worth more.

Dresing says people who are ready for a new car can't get one, so they're holding onto their used cars. Then dealers can be willing to pay more to take it off your hands.

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