You may have seen in the press recently the news of a worldwide chip shortage. Not the fried and salted kind (now that would be bad), but the semiconductor kind. Similarly to in a mobile phone or games console, these chips act as the “brain” of the vehicle, pulling together all of its electronic processes, gadgets and gizmos. They’re pretty crucial.
The shortages of these semiconductor chips has had an immense impact on the new car sector’s supply chain and has meant massive delays in the vehicle manufacturing process. This means for us as a leasing broker, it's increasingly difficult for us to source vehicles in stock. Demand far outweighs production, forcing us in many cases to factory order vehicles and therefore quote delivery timescales much longer than we’d prefer, and even then these are subject to change.
Many car manufacturing plants have been forced to halt production, meaning cancelled build slots pushed back lead times (in many cases by months) have become a commonplace as a result of the shortage. We’ve even seen manufacturers stockpile otherwise fully-assembled vehicles in giant car parks while they await the next delivery of microchips in order to complete the assembly.
What has caused the shortage and how long will it last?
The demand for these chips is humongous. Coronavirus has prompted a swift increase in the sales of chip-requiring devices such as laptops to accommodate home-working. Coming out of the pandemic, we are seeing unprecedented demand for Sony’s new PlayStation 5 games console and mobile phone sales remain hot.
This demand is being asked of an industry wrestling with the impact of not only COVID-19, but a combination of other challenges and crises forcing operations to slow or halt - including a major factory fire at the Renesas chip manufacturing plant in Japan and a Texas plant left without power after being hit by a storm - only exacerbating the supply shortage further.
Chip manufacturers have quite a way to go until the backlog is cleared and demand is met - at least until the end of the year and most likely even beyond. Millions of vehicles are expected to be delayed throughout 2021, and the unfortunate reality for the automotive sector is that we’re right at the back of the order queue.
How is Car Leasing People adapting to the shortage?
The lack of vehicle availability is unavoidably a difficult time for the new car industry - but our operations are far from coming to a standstill.
Whilst less abundant than usual, we are still sourcing fantastic in-stock lease deals for quick delivery, and our focus is on being as open and transparent with our customers in regards to any potential delays or cancellations on orders.
Further to this, in anticipation of further delays, Car Leasing People are constantly working to commit to batches of desirable stock vehicles often at pre price-increase rates to help us to continue providing a fantastic service and competitive prices through the industry struggle.