Used cars seeing increase in value as microchip shortage slows manufacturing of new vehicles

Used car market red-hot as ripple impact of microchip shortage is felt

As a shortage of computer chips leads to a slowdown of car manufacturing, putting a strangle on the market supply, Governor Walz is pushing for legislation to help a Twin Cities chipmaker.

SOUTH ST. PAUL, Minn. (FOX 9) - As a shortage of computer chips leads to a slowdown of car manufacturing, putting a strangle on the market supply, Governor Walz is pushing for federal legislation to help a Twin Cities chipmaker.

"I've never seen the market this crazy," explained dealer Ben Footh.

Pre-pandemic, Ben Footh had about 150 vehicles spread out between his two Footh Auto Sales lots. These days, he circulates through about 85. Mainly because the microchip shortage for producing new cars continues to mean much higher prices for used, and shops like Footh's are running lean.

"The shortage has caused used car prices to escalate, so incredibly high that a lot of our customers who purchased one to four years ago are sitting really, really nice right now," he explained. "Because their vehicle is worth, in some cases, not only what they paid but more than what they paid."

Thursday, Governor Tim Walz and DEED Commissioner Steve Grove toured SkyWater Technology in Bloomington. The company is increasing the production of microchips for a variety of industries, from automotive to medical and aerospace.

The group is also advocating for United States Innovation and Competition Act, recently passed in the Senate, which is believed to be a huge opportunity for places like sky water to increase production even more.

"Not only is it the expansion and hundred jobs and peripheral jobs that go with it," said Governor Walz. "It's the security that comes with knowing we are manufacturing our chips. We are not at the mercy of what’s happening with the supply chain of Taiwan or anywhere else and we control some of the security right here in the United States."

Footh is watching any potential help with the microchip shortage closely and working to diversify his businesses in all sorts of ways including maintenance until prices for new and used cars return to levels he is used to.

"Most dealers are bracing for next summer or late fall," said Booth.