An interesting aspect of life as we move through the pandemic…car shopping.
Three years ago, Susie and I decided to trade in our five year old 2013 Hyundai Sonata Limited. It had been a great car, but because it was the car we’d used for our “Big Trip” in 2016, it had over 80,000 miles on it, and had started to cost us some repair money. Having never done it before, we investigated the world of car leasing. As we get older, we like the idea of having a new car every 3 years, and of not tying up the full purchase price of a new car, but rather only paying for the years we would be using it. We also decided that since we sometimes had been forced to ask friends to pick up things for us that didn’t fit in our sedan, we would look at the world of small SUVs. We were not looking for something the size of a Chevy Suburban and as I did my usual due diligence on what was available, I liked the Honda CR-V. Car-like, good reviews, great gas mileage, and when the seats were folded down, enough room to load our Christmas Tree and all the ornaments to get them from our storage place to our home. We now had our target.
Late spring of 2018, we decided to stop in at our local Honda dealer, Boardwalk Honda in Egg Harbor Township and take a look at a CR-V. We walked into the showroom and met a salesman named Brian Ford. After laughing that a man named Ford was selling Hondas (yea, probably the 10,000th time he’d heard that) he showed us a CR-V that was on the floor. Susie and I sat in it in almost all the seats and liked the way the car felt and thought the size would be perfect for us. We told Brian that we were still going back and forth between buying and leasing, and we promised we’d come back and see him when we made up our mind.
Over the next couple of weeks, we went back and forth. One day we were going to lease, then the next day we were going to buy. We continued the discussions like this till we decided one day it was time to put up or shut up, and the final decision was made to lease. Having never leased a car before, I read up on it on the Internet, and on Monday June 11, 2018 we went back to Boardwalk Honda to talk to Brian about the particulars. Things happened faster than we envisioned, and that afternoon we no longer owned a 2013 Hyundai, but were rather the new leasers of a 2018 Honda CR-V EX-L in Sandstorm Beige. We were scheduled to travel back to Long Island the next day, see some Doctors, and then meet Krissi and our not yet son-in-law Mike for drinks and dinner. We made the trip in a brand new CR-V with less that 20 miles on the odometer!
In the ensuing months and now years, we’ve grown to love our CR-V. It was just the right size, was comfortable to drive, got incredible mileage (30+ driving 70-80 MPH on trips – 25+ around town) and as our daughter said, “Unless you look behind you, you don’t even know your driving an SUV.” We’ve loaded and unload our Christmas things 3 times, shopped at Lowes and Home Depot, made 3 trips to Florida, and countless trips to visit our son’s family in North Carolina, to visit Krissi and Mike in New York, and our Maryland family too. It’s just been the perfect vehicle for us, and we had every intention to turn it in at the end of the lease, and start all over again! Then came the Pandemic.
Today’s cars are lightyears ahead of even those that were produced 10 years ago. Our CR-V has Adaptive Cruise Control that uses radar to judge the speed of the car in front of you and slow you down. It has Lane Keeping Assist that uses the radar and cameras to direct the car back, should you wander out of your lane. It has emergency braking, which causes the car to break itself if you do not heed the warning it gives you. It has Side Warning Sensors that warn you if there is a car in your blind spots on either the right or left side. In short, the car thinks and is there at the ready if you, the driver, don’t respond. How many chips do you think every modern day Super Car uses??? Then came the chip shortage!
A lesson that the world auto makers learned a long time ago from Toyota, was a concept called “Just in Time” parts inventory. The Japanese were famous for having parts delivered to their assembly lines when they needed them, saving the expense of storage. When the world shut down with the pandemic in March, 2020, automakers the world over cut orders on parts including chips. Many of those in the semiconductor business switched their production from the chips used by the auto industry to chips used in consumer electronics, like 5G cell phones. However, the pandemic did not derail the sale of cars as much as was expected and the auto industry faced much more demand then they’d anticipated, but unfortunately the supply of chips they needed just wasn’t available. Ford had thousands of F-150 pickup trucks (the best selling vehicle in America) built but unable to be finished due to the chip shortage. Honda, Subaru, Toyota, and Volkswagen also have individual models that have lost more than 10,000 units to the chip shortage in North America. The obvious solution would have been to just increase the capacity at the car maker’s suppliers, but given how difficult and expensive it is to build semiconductors, the reality is that just wasn’t possible!
So what was the effect of the chip shortage? Car prices went wild! Used cars went through the roof, with year or two old cars selling for even more than they cost new! New cars were selling for above sticker price, if you could get them at all, and all the “normal” rules of the car buying business went out the window. According to our lease contract at the end of our lease, we could buy our CR-V for $18,45, but today a 3 year old Honda CR-V with 40,000 miles on it is worth over $24,000! Crazy! In checking the inventory at our local dealers on line, I found 3 or 4 of our models, rather than the 30-40 there were 3 years ago. Although I really didn’t want to buy the car, I was afraid that as our lease had less than 2 months left, I didn’t know what else we could do.
Just the other day, I decided that I best give our salesman a call, and see exactly what the situation was. I discovered that Brian was no longer a salesman, but rather the Finance Manager at Boardwalk Honda, but as an established customer, he was happy to deal with me. He confirmed that they only had a couple of CR-Vs in stock and since we are kind of particular on our color selection, what they had in stock or what they were getting delivered in their next shipment did not meet our needs. I asked him what to do, and he said that the factory has told them that they are getting more chips and expect assemblies to ramp up in the next 3-4 months, and that if we waited, they would probably have exactly what we wanted. I asked him, “So are you saying I should buy the car?” and he said, “No, just call Honda Financial and extend your lease.” Turns out I can tell them I’d like a 6 month extension of the lease, and since it’s really month to month, just terminate it when we start a new lease with a brand new CR-V. Now our only problem is, do we want an Aegean Blue or Radiant Red CR-V, and will it be a 2021 or 2022 model. Stay tuned…