A selection of used vehicles at Team Gillman Subaru North 18202 North Fwy., is shown Friday, July 16, 2021, in Houston. Car and truck sales in Houston and the surrounding counties have skyrocketed in recent months despite an ongoing computer chip shortage.
Retail vehicle sales in Houston have seen a recent boom, increasing 30 percent year over year in August despite supply chain challenges and limited inventory.
Nearly 195,000 vehicles have been sold in the Houston area this year, according to data from TexAuto Facts Report published by the Houston-based InfoNation. Car and truck sales are up 6 and 13 percent respectively since the start of the year, even though average retail prices hit a record high.
Auto sales were hit hard during the pandemic because of a global shortage of microchips. Shortages hampered automakers’ ability to meet demand, raising prices and delaying vehicle delivery for buyers.
Ongoing supply chain issues and chip shortages have continued to dampen vehicle sales across the country this year, according to industry analysis from Edmunds, an online car shopping tool that produces automotive industry insights. At the beginning of the year, Houston-area dealerships said they had as few as two cars in their inventory, instead pivoting to used car sales and pre-sold cars that could take up to six weeks to deliver to a customer.
The inventory issues have caused vehicle sales to become inconsistent between regions and dynamic month to month, according to Ivan Drury, Edmund’s director of insights. Though demand for vehicles is rising across the board, sales increases are heavily dependent on what brands particular regions favor and when those brands are able to build supply, he said. Though some American automakers are doing better than before, they continue to face issues related to the shortage.
Some brands have taken to reducing the number of features in their vehicles, such as heated seating or steering wheels, in order to work around not having enough chips, according Drury.
Others have large stockpiles of cars fully assembled but awaiting chips before they can be shipped out, he said. Last week, Ford — a longtime bestselling brand in Houston — announced it has between 40,000 to 45,000 otherwise built vehicles in its inventory awaiting specific parts, which it expects to finish and release later this year.
The trend in Houston only began to take a turn in recent months. From January through June, car sales were down 2 percent and truck sales were up 7 percent in Harris County, according to the TexAuto Facts Report. In suburban counties, car sales were down 5 percent and truck sales were up 9 percent compared with the same time frame last year.
But in July, sales skyrocketed by 38 percent year over year across both categories in the Houston area. The increase was particularly strong in suburban counties, where buyers bought 40 percent more cars and 74 percent more trucks than they did in July of 2021. August sales weren’t as high as July, but were still up compared with last year.
When fuel prices increase, consumers tend to put off truck purchases or look at smaller cars or electric vehicles, Drury explained. Now that gas prices have been falling for several months, more consumers may feel comfortable buying trucks.
The prices of used cars have also begun to return to normal, he said. Typically, the value of a used car falls throughout the year as it gets older and gains mileage, according to Drury. But lack of inventory pushed typical new-car consumers toward buying used, both driving up demand and introducing a new set of customers who have better credit ratings and more money for down payments than the typical used-car buyer, he said.
Now there’s been a return to the typical seasonality of used-car prices, Drury said. According to analysis by Edmunds, 3-year-old vehicles cost about $1,500 less on average in July than they did in January.
Manufacturers aren’t sure when the chip shortage may end, he said. It’s likely to last at least into 2023, and dealerships may not be able to build up strong inventories until late into next year, Drury predicted.
megan.munce@chron.com
Megan Munce is a Hearst Fellow working for the Houston Chronicle.
Megan recently graduated from Northwestern University’s Medill School of Journalism with a B.S. and M.S. in journalism and a second major in political science.
She previously worked as an audience engagement fellow and a reporting fellow at the Texas Tribune, as well as an audience intelligence intern for KQED, the Bay Area’s NPR and PBS member station.