In case you hadn’t noticed, new cars are in short supply. Demand is there, but car buyers across the world are reporting annoying delays just as economies – and individuals – are getting back into action after the trials of the Coronavirus pandemic. Dig deeper and it seems that the problem largely comes down to chips! Read on to discover more…
An article published last year on the Motability website tells a bleak story about 2021’s UK car production slump. According to Motability’s writer Joanna Partridge, it’s all down to a combined shortage of suitably skilled workers in the car factories and a lack of vital semiconductor chips.
According to Partridge, business reporter for the UK’s Guardian newspaper, ‘The number of cars rolling off UK production lines [in June 2021] slumped to the lowest June level in almost 70 years, as car manufacturers were hit by shortages of both staff and semiconductors.’
The Society of Motor Manufacturers and Traders (SMMT) reported that in November 2021 the country produced just 75,756 vehicles, down almost 29% on 2020 and the fifth consecutive month of declining production.
Seemingly, it’s all mainly down to the global pandemic hitting semiconductor chip production. And with around 1,500 chips in a typical car these days it’s hardly surprising that the motor industry is now feeling the pinch. Now throw in the effects of the recent Omicron wave and the widely-publicised ‘pingdemic’ which has seen skilled car builders self-isolate after being ‘pinged’ by the NHS app. It’s a production-crippling double-whammy for UK car factories. Ouch!
Rory Reid explains how global chip shortages are leading to delays on new cars.
Jump back in time and across the Atlantic for a moment and think about Robert Noyce and his pioneering work on monolithic IC chips at Fairchild Semiconductor in San Jose, California. Who’d have thought, back in the 1950s, when silicon chips were still a cutting-edge tech novelty that hundreds of them would be at the heart of every motor car over 60 years later. But, of course, just as semiconductor chips have entered every facet of our lives, so they’ve become ‘mission critical’ for the new Fords, Toyotas, Nissans and Minis that we covet in our post-pandemic world.
Without question, Coronavirus has been the biggest impactor on global chip supply. Car manufacturers failed to forecast the huge increase in demand, at a time when smartphone and IT industries have also ramped up production (following vastly increased demand from people buying brand new entertainment and work devices during the pandemic). But other factors have also played a significant role in fuelling this high-tech shortage. First, ‘Winter Storm Uri’, hammered Texas (a major ‘semiconductor state’) last winter. A month later, across the Pacific Ocean, a disastrous fire at leading Japanese ‘chip shop’ Renesas Electronics Corporation struck another blow to chip supplies.
Taken together, these events did more than just slow production lines for a few days. Production of whole product lines paused. Manufacturers’ quarterly forecasts were thousands of vehicles down and production was suspended at the factories of manufacturers who’d otherwise be profiting from all this new automotive demand. From Mazda to Mercedes, and Toyota to Porsche, no chips has meant no cars and caused delays in our local dealerships. Vehicle type hasn’t made a difference either: availability of petrol, diesel, hybrid and electric cars has suffered.
You’d imagine that global manufacturing giants such as Toyota, Volkswagen, Nissan-Renault and Hyundai-Kia, would be able to call the shots with chip manufacturers. Alas, it’s not that simple because the consumer electronics giants have far more clout with semiconductor firms and they’re stoked on fast, profitable pandemic sales. What’s more, vehicle manufacturers often use older, long-lasting, legacy chip designs, which aren’t as profitable for the semiconductor makers. With time, balance will undoubtedly be re-established in the marketplace. The semiconductor companies will increase production and build new chip plants, while some car makers will probably bring chip making in-house. Eventually, there’ll be enough supply to meet our demand.
Meanwhile, patience is the watchword while the world’s chip makers catch up with demand from car companies. And unfortunately, whether you're waiting for a new Motability Scheme cars or not, you could be waiting 6 - 9 months for the call from the dealership that says your new car or Wheelchair Accessible Vehicle (WAV) is finally en route to the dealership.
For a while longer, perhaps the only way to get behind the wheel of a new car will be by playing the latest version of Gran Turismo Sport on the new Playstation 5 – powered, of course, by semiconductor chips!
