News of a global shortage in microchips is threatening the motor industry with lead times doubling and many factory orders not arriving until January 2022.
A factory order on a Land Rover is usually delivered within three months, current lead times are between five to six months.
Ford Transit Custom leads have doubled, and Volkswagen is facing similar problems. Anyone ordering a Volkswagen Transporter today will not receive it until January 2022, the same for an Audi A3, no deliveries until January 2022.
Figures from the Society of Motor Manufacturers and Traders (SMMT) show car production increased three-fold this April compared with the same period last year, with 141,583 new units compared with 4,321 last year.
However, the microchip issue could halt progression as manufacturers are unable to meet demand.
Mike Hawes, SMMT Chief Executive, said: “Whilst the Covid situation is improving in the UK and in some major export markets, manufacturers are still struggling to manage residual issues, most notably the global semiconductor shortage.”
Why the shortage?
There is a worldwide shortage of microchips which are used in car components including satnav units, digital speedometers, and parking cameras.
The microchips are also used in computers, smartphones, and gaming consoles and as people have been spending more time at home during the pandemic, demand for these products has surged leading to a decline in the number of microchips available. Gamers will know the struggle of trying to find a PS5 or Xbox earlier in the year, another casualty of the microchip shortage.
It is not only demand, which is causing the shortage though, a fire in one of the largest microchip plants in Japan, which is responsible for supplying the motor industry, has also added to the problem.
Manufacturers do not stockpile the microchips, instead ordering to meet demand and the shortage is already impacting the industry.
Which manufacturers are affected?
Microchips are used in all vehicles, so the problem is affecting most manufacturers.
Jaguar Land Rover recently announced it was stopping production temporarily at its Halewood and Castle Bromwich factories blaming the shortage of microchips.
Ford announced it was extending the shutdown of plants in Europe and North America and Vauxhall and Renault have also said the shortages are affecting them along with Volkswagen and Tesla.
What does this mean for consumers?
Some experts are predicting shortages for the rest of this year and early 2022. For lease vehicles we have seen lead times almost double and have been notifying customers who have placed factory orders.
For customers with contracts due to end within the next three months, we are offering potential extensions until their new car arrives.
We are advising anyone who is due to change their lease vehicle this year to speak to us immediately.
For information on contract hire and leasing contact:
Call: 0800 096 6488
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