Global Semiconductor Chip Shortage Affecting Car Production
Currently, there’s a global shortage of microchips affecting supply levels in various industries, including the auto industry. A lack of microchips has meant delays and shortages in the supply of cars. Read on to find out more.
Why do cars require microchips?
For various reasons, every electronic device uses microchips. In essence, these microchips get everything working via little circuits. For example, in cars microchips are required as part of the driver assistance systems and digital displays, just to mention a few. These microchips need to be made in special factories where there’s zero dust and it’s empty of any static electricity. As technology has advanced, demand for chips is increasing and exceeding supply. Meanwhile, the factories are very expensive and take a lot of time to build so there currently isn’t enough to meet the production demand.
Why is there a shortage of microchips for car production?
The shortage of microchips is causing delays on the production of cars so there’s a backlog of orders. For example, Jaguar Land Rover, had to pause the production of the XE, XF and F-Type, as well as the Discovery Sport and Range Rover Evoque due to the shortage. Other manufacturers have also had to pause the production of cars causing further delays.
One of the main causes for the shortage of microchips is the Coronavirus pandemic. At the beginning of the pandemic, car manufacturers were ordering less microchips due to the drop in demand for new cars. Meanwhile, tech companies like Sony ordered more microchips for electronics in high demand. As previously mentioned, demand for chips is increasing and exceeding supply. Now that car production is picking up again, factories are struggling to keep up with the growing demand for microchips causing huge delays.
Production was further hindered by a Texan storm in February. A large proportion of the world’s microchips come from Texas and when the storm hit it caused extensive power cuts. In turn, this caused microchip factories to close, resulting in further delays to production. Then in March, the Renesas plant in Japan caught fire resulting in damage to 17 machines and slowing production.
What does this mean for car production?
Well, cars can’t be made without these microchips and the huge backlog on orders continues. This is expected to impact the production of millions of cars worldwide. Unfortunately, many customers are experiencing delays getting new cars, regardless of where they get them from. Long lead times are also causing a surge in demand for stock cars and therefore stock has become very limited.
At GB Vehicle Leasing, we are doing all we can to be transparent and honest with our customers about lead times on new cars. We encourage customers to keep this in mind when looking at lease deals. Where possible, our team are working hard to secure stock cars, although this is a challenging time for our whole industry. For our full stock list and to see how we can assist you further, please call us on 0161 667 5338 or email us at email@example.com
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