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Semi-Conductor Crisis

Posted on 8 Nov 2021

3 min read

As demand for vehicles increases following the pandemic, the car production industry is now struggling to source semi-conductors for use in vehicles.

Semi-Conductors are found in everything from televisions and microwaves through to in-car entertainment systems and even vehicles key-fobs. Demand from car-makers inevitably fell during 2020, however this coincided with an increase in demand for chips being used in gaming and mobile devices – when global car makers tried to resume orders after the pandemic, supply was short which has led to delays. This has been made worse due to earthquakes, floods and fires at semi-conductor plants across the world – https://www.bbc.co.uk/news/technology-56486242

The problem is that semi-conductors come in all shapes and sizes.  Shortage of one particular type could result in a vehicle not being built which impacts lead times. A shortage in one vehicle increases demand for others which in-turn increases lead times across the industry. In an industry that relies on ‘just in time’ working practices, this is likely to see 350,000 fewer vehicles built in the UK alone. Jaguar LandRover are not alone but customers are already facing a wait time of a year for deliveries of new vehicles – https://www.thisismoney.co.uk/money/cars/article-9919375/JLR-customers-forced-wait-YEAR-delivery-models.html. Some manufacturers are changing options on vehicles in order to continue building them. We will always make customers aware of these changes but please consider that they are often outside our control.

In September the Society of Motor Manufacturers and Traders (SMMT) said new registrations had dropped 35% compared with September last year. They blamed falling car production as a result of the ongoing shortage of computer chips. 214,000 vehicles were sold in September 2021, the lowest monthly total since 1998.  Delays are not just affecting the contract hire and leasing industry – a shortage of cars is also affecting the short term rental market too. Short term providers sold many of their stock to maintain cash-flow during the pandemic. As they try to re-order vehicles they face the same long lead-times as other customers. We will always do our best to source a vehicle for you but whilst supply is short and demand is high, our options for a vehicle may be limited.

We will continue to manage our fleet to take market fluctuations into account. Please consider ordering replacement vehicles earlier than normal to avoid lengthy delays, in most cases we’re also happy to extend your current contract dependent on the age and mileage of the vehicle. For more information on current lead times please speak to your dedicated area manager.  

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