Why new cars have such a long delay from order to purchasing
The global semiconductor shortage is affecting businesses worldwide, and the automotive industry is no exception. Many key components needed to build a new car rely on chips, and with chipmakers struggling to keep up with demand, there are widespread shortages. This has had a major impact on the availability of new cars, with dealers reporting longer lead times for customers who order a vehicle.
In some cases, it can take over 12 months from placing an order to taking delivery of the car and that’s if everything goes according to plan
The importance of Microchips
Because of a shortage of microchips, the huge majority of manufacturers now have to decrease or, in some cases, halt their production lines. Microchips are used in the circuitry of every electronic device, which includes mobile phones, PCs, game consoles, and your car.
The computer chips contain tiny components that help control various functions, such as your car’s entertainment system, assisted parking, etc. Microchips must be manufactured in dedicated factories with tidy conditions where there’s no dust or stationary electricity because they are so small and precise.
What’s causing the delays in new cars?
One of the main reasons is the chip shortage before the pandemic. China was already facing challenges before the Covid-19 hit, with a growing demand for chips and insufficient capacity to meet that demand.
The situation was made worse by the trade war between the US and China during the Trump Administration, which led to a decline in chip exports from China to the US. This, in turn, has resulted in a rise in prices for chips and other components needed to build a new car.
As a result, fewer chips were produced and were used in higher-selling consumer electronics. Because we’ve been driving less since the pandemic, chipmakers have naturally prioritised other products. Remember, microchips must always be produced in specialised factories with clean working conditions free of dust and stationary electricity. And that only happens in China at the moment.
The Pandemic Closed The Worlds Manufacturing
In the first three months of 2022, nearly 100,000 fewer cars were made than in the previous year. According to the Society of Motor Manufacturers and Traders, manufacturing has dropped by nearly a third (SMMT). According to the SMMT, the decline is due to a severe shortage of microchips and high oil prices for manufacturers.
Just 207,347 new cars were made in the UK in the first three months of the year, down from 306,558 in the same three months of 2021, when the global Covid pandemic added additional pressures on manufacturers. Manufacturers have difficulty obtaining the parts they require, particularly semiconductors or microchips, which are broadly used in most if not all modern vehicles.
Every major car factory in Europe shut down at the beginning of the pandemic, and some plants in the UK closed for months as they implemented the new social distancing rules. Britains car sales in 2020 were the lowest since 1992, putting a damper on demand for the fifth of Britain’s vehicles that remain in the home market.
Ultimately, the global COVID pandemic forced chipmakers to reduce production because of lockdown mandates. And, as everyone else is forced to remain indoors, sales of electronic gadgets such as tablet devices have skyrocketed, as we’ve all depended on them to keep us entertained during a very long year indoors.
China shutting down manufacturing again in 2022
The country’s massive car industry has been thrown into chaos by the nation’s latest COVID spike, with strict lockdowns affecting vehicle production in several cities. The country’s worst COVID epidemic in 2 years has compelled authorities to tighten the nation’s zero-Covid policy, resulting in the closure of several large cities and the evacuation of millions of people
Automakers have been forced to shut down manufacturing in places like Shanghai and Jilin province, risking postponed consignments when the global demand for cars is high.
Volkswagen’s (VLKPF) industries in Changchun, Shanghai, and Jilin’s provincial capital have been closed for weeks, according to the company.Lockdowns in Shanghai and other Chinese cities are becoming more common, posing a growing economic threat.
“Production in our processing plants in Changchun (since mid-March) and Anting/Shanghai (since April 1) is currently on hiatus due to the current COVID situation,” Volkswagen said in a written response to CNN Business. “At the moment, this is causing a production delay.”
Toyota (TM) has shut down its Changchun factory for nearly a month. Toyota has been halting operational processes at the Changchun factory from March 14 onwards due to travel limitations in Changchun, the effect on sustainability principles, and the desire to ensure the protection of employees and all relevant entities.
According to Reuters, Tesla (TSLA) has ceased operations at its Shanghai production plant since the city decided to impose a lockdown on March 28.
War in Ukraine
Respectively, Russia and Ukraine play critical roles in the automotive value chain and vehicle manufacturing in times of peace. Unfortunately, interruption has been an unavoidable result of the continuing conflict between the two countries. Even if the battle does not reach our shores, the impact will undoubtedly cause a domino effect.
The automotive industry has faced numerous challenges in the last half-decade, particularly in production and manufacturing. Following the semiconductor manufacturing shortage, which is still not fully resolved and the sector is in the initial phases of yet another disruption.
Vehicle values will undoubtedly be impacted as a result of rising fuel costs. Because Russia provides 40% of Europe’s gas, the challenge of disrupting the oil and gas value chain has already attracted a lot of attention. Raw materials, production, sanctions, and logistics are still in flux for the automotive industry.
Global brands are withdrawing from Russia as of right now, united in their opposition to Russia’s unprovoked invasion of Ukraine. Reflecting the geopolitical landscape further ramping up, we have decided to instantly halt all our business operations in Russia till further notice, “said a Daimler Truck spokesperson. Mercedes-Benz will suspend passenger car and van exports to Russia and Ukraine.
The world’s new car market is in serious trouble which is impacting the availability of used cars in the market as well las the value of used cars increasing due to their demand.
Contact us today on 0117 963 8916 if you are looking to change your car as we have a stock of used cars available. Alternately, put a hold on your plan to change your vehicle and book it in for its annual service or check which will keep it running more efficiently and increase its life span.