Shortages of semiconductors puts the brakes on new car production

Who would’ve thought that one missing chip could create mass car shortages across the globe? Limited supply of semiconductors has spared no industry, with car production feeling the blow on a large scale. These shortages might be the reason you’re having to wait longer for the delivery of your new lease car – here’s why.

Why are there semiconductor shortages?

Like most shortcomings from the last year, we can blame some of the semiconductor shortages on the COVID-19 lockdowns. When manufacturing had to come to a standstill during the pandemic, this only added to issues that were already on the rise.

Before the lockdowns, the car and semiconductor manufacturing supply chains just did not match up. Semiconductors can take up to 12 weeks to manufacture, and the car industry often needs them much quicker than they can be made.

This supply and demand issue has only been amplified by the need for semiconductors in other manufacturing processes – items such as our phones, digital cameras, TVs and household appliances also need these sneaky little chips to function. As well, the COVID-induced boredom that drove many of us to purchase games consoles and laptops through lockdowns only added to the demand.

In short, although the world shut down and semiconductors had to stop production, the demand for the conductors around the world only increased.
To add to this, car sales started to increase after the lockdowns began to phase out – but semiconductor manufacturers were not prepared. They were still rushing to fulfil orders that were needed for our new laptops and games consoles. Nobody was expecting the auto-sales industry to pick up as quickly as it did, and the semiconductors in production were already designated for other uses.

So, production stopped + demand grew = supplies ran dry.

What is the ‘Pingdemic’?

At this point, manufacturers are desperately trying to build up stocks of semiconductors, but ‘pings’ from the NHS app to self-isolate due to COVID exposure mean that there aren’t enough staff to keep up with the workload. Currently, there are calls for a ‘test to release’ programme so staff can return to work if they test negative after being notified. This will allow production to move forward, so car manufacturing can get off the ground again.

Whilst self-isolation is very important for anyone that has come into contact with the virus, constant ‘pings’ from the app and reoccurring isolation periods are really taking their toll on the supply chain.

What does this mean for the car industry?

At the beginning of 2020, most of us were too preoccupied with salvaging the last of the toilet paper to concern ourselves with getting a new car. As a result, the auto industry experienced a huge drop in demand. As previously mentioned, the semiconductors currently being manufactured were already designated for other purposes. This meant that it was impossible for the auto-sector to meet the demands for new vehicles, as the demand started to grow once again.

It has been widely discussed that the supply and demand issues between the auto industry and semiconductor manufacturers is far from being solved, meaning that car sales may feel a huge financial blow as they must slow down orders. Currently, vehicle manufacturers are rushing to source reliable suppliers of conductors and must start to plan for long term navigation of the shortage.

How will this affect your new lease car?

Well, we’re currently working on alternate branding of ‘HorseandCartlet,’ but we hope that manufacturing will pick up again before it hits that point. The supply chain is still running, there’s just a delay in what’s being put out. Because of that, you might experience a longer wait time on your new lease car – it’s best to chat with our team to get an accurate time frame for our lease models, and to see if we have any models in stock that you can receive sooner.

As well, some manufacturers are dropping features from their vehicles so they can use less semiconductors and get their cars out quicker. For example, Audi Phone Box and Phone Box Light features will no longer be fitted in Audi models as standard, apart from the Audi e-tron GT and the R8 models. You can find the details on those changes here.

Of course, the Motorlet team will be here to keep you updated on the progress of your car and ordering a vehicle that is already in stock might be a way to get around longer wait times.