Semiconductor chip shortage 2021: How the automotive industry is responding

Automotive chip shortage update from Carparison

As the United Kingdom moves towards the complete easing of COVID-19 lockdown restrictions, the long-term effects of the pandemic are still being felt in the automotive industry.

Now most prominently through the onset of a global semiconductor chip shortage: a tiny but vital component of many technological devices. 

All production lines have been hampered by stock and staff shortages over the last 18 months, reducing potential output. This paired with changing consumer habits during worldwide lockdowns meant that what semiconductor chips there were, were diverted from automotive manufacturers to other industries.

Vehicle manufacturers across the globe are now experiencing lengthy delays in their efforts to produce and deliver their latest models or are being forced to make temporary changes to their models to keep up with demand.

The knock-on effects to the semiconductor shortage are vast and can vary from manufacturer to manufacturer. Overall, we are expecting lead times on factory order vehicles to increase and there to be a risk of less choice across makes and models as stock depletes quicker than manufacturers can replenish it.

It is something all those undertaking their car search should be aware of, especially if the vehicle is needed urgently.

What is a semiconductor chip?

A semiconductor chip controls the flow of current through electronic equipment. Described as ‘the brain’ of consumer electronics, they are prevalent in almost every device we use; from our mobile phones, laptops, games consoles and our vehicles.

Within cars, these computer chips are extremely important and help to power components such as your onboard navigation systems, electric windows or key safety features.

What is causing the current semiconductor shortage?

Like many industries, the automotive world somewhat shut down during the initial peak of COVID-19. Physical showrooms were closed and some factories delayed or even stopped production of new cars. This resulted in a sizeable decrease in demand for semiconductor chips within the automotive industry.

At the same time, the world changed drastically with a large percentage of the population working or learning from home. This caused a sudden and sharp rise in demand for semiconductors for devices like laptops, tablets and monitors. 

The demand for mobile phones remained high, while both Microsoft and Sony launched new games consoles. This stark change in behaviour encouraged by worldwide lockdowns meant the supply for semiconductor chips shifted to these markets rather than the automotive world.

Furthermore, the rate of chip production and semiconductor supply simply could not match demand. As per the Irish Times, earlier this year, Renesas, the world’s second-biggest chip manufacturer in the semiconductor industry – based in Japan - were forced to momentarily stop production. 

How are car manufacturers being affected by the semiconductor shortage?

All car companies are being affected differently because of the global semiconductor chip shortage; from delays to specific models or others having stopped production altogether. Where production can proceed, it could also mean that standard or optional equipment is not readily available at the time of production. 

AutoForecast Solutions believe that just over 200,000 fewer units of cars will be produced across 2021.

This is an ever-changing situation, with manufacturers working avidly on solutions to mitigate the impact on consumers. Most prominently, in adjusting vehicle specifications at build and offering to retrofit these options when they become available, where possible.

Some of the changes to car production include select Peugeot models being produced earlier this year without digital speedometers. Stellantis told Reuters that plans to roll out digital meters had to be abandoned as a result of the chip shortage. 

Back in April, Jaguar Land Rover Automotive confirmed an initial pause on the production of select models being produced out of their factories in Castle Bromwich and Halewood as a result of the shortage.

Audi have also recently revealed that new models will temporarily only be available with a single remote function key. The second remote key will be delivered when stock levels improve, but they are unable to confirm yet when that will be.

Mercedes-Benz UK have confirmed that select models may initially be produced without Augmented Reality for Navigation and Dashcam. However, customers with existing orders affected by this will be informed and can then have these elements retrofitted at a later date once the necessary components become available.

How is Carparison adapting to the global chip shortage? 

Fear not, if you have your heart set on a Land Rover lease or would love a new Mercedes A-Class lease, these, and many others, are still possible with Carparison.

Carparison are committed to providing their customers with the best possible leasing experience. This remains even when stock availability is under pressure and where manufacturers may be choosing to alter the specifications of their car builds to minimise the impact. 

One of the biggest pitfalls consumers are facing is an increased lead time. From the moment you enquire for one of Carparison’s best car lease deals, our customers are informed of realistic and honest delivery times. If time is tight, let your leasing consultant know and they will find the best solution for you.

If our vehicles are being produced differently or standard elements are missing, you will be informed at the earliest possible opportunity. Our leasing consultants will be more than happy to explain what this means for your chosen lease car. 

With vehicle supply low and demand still high, there is a tendency for prices to rise to reflect the latter. However, our Pricing team will continue to work tirelessly to secure the best price for our customers. Carparison are committed to providing a fair price on our lease cars, despite the uncertainty that surrounds the semiconductor shortage. 

We always do the haggling so you don’t have to.

Matt Woodward, General Manager of Carparison, said, “At Carparison, we are working relentlessly to provide our customers with the best lease deals and as much information as possible in an uncertain time for all. Keeping our customers informed and providing clarity about the ongoing market situation is hugely important to us and anyone who leases a car through Carparison will be kept up to date with the latest information throughout their leasing process.

“With the supply of cars not currently matching the high demand, it is important that we continue to put the customer first. In times like these, we do not want to take advantage of that increased demand with higher prices. Our team works hard to secure the latest models at a fair price that reflects fantastic value for money for our customers.”

What is the solution for customers? 

In many cases, the main concern will be the wait for your new lease car to be delivered. If you are flexible in your model of choice, this should be less of a worry. However, the effects will vary from person to person, depending on your current circumstance. For those with their heart set on their lease car of choice, we recommend enquiring well ahead of time.

For others, this could mean that equipment that would traditionally be considered as standard may not be available, while optional extras may be limited. Your leasing consultant will make you aware of any changes as we get them from manufacturers.

While customers may face longer lead times and changes to the production, Carparison offer fantastic in stock car lease deals that are ready to be delivered straight to your door. However, of course, these are only available while stocks last.

Top tips for leasing a car during the semiconductor shortage

1) Plan ahead for your next car lease

If you are coming towards the end of your lease term in the next six to 12 months, we would encourage you to speak to your designated leasing consultant and begin to plan ahead. Taking that initial step ahead of time is a positive step to experiencing a worry-free delivery of your next car.

2) Browse Carparison’s in-stock vehicle offers

Carparison have a wide range of vehicles in stock that are ready to be delivered straight to your door. Long waits for delivery can be a thing of the past with a select number of the many fantastic deals we have available. If you would like to find out more, please get in contact with one of our leasing experts or search our in stock car lease deals. 

3) Consider alternative options

Looking for your next car and know you need something with room for all the family? Are you considering an electric car lease deal? We would encourage all our customers to consider different options when deciding on their next car. Make your designated leasing consultant aware of your needs and they’ll be happy to provide you with several options.

4) Short-term lease

The shortest lease term available through Carparison is currently just 24 months. However, we work closely with partners who can offer terms of as little as three months. Considering a shorter lease term could allow you to get into a vehicle sooner and remain mobile. Short-term car leasing with Carparison allows you to be flexible and is perfect for those who enjoy regularly changing their vehicles.

5) Sell your car

With stock being in such high demand, prices on used cars are incredibly buoyant. If you have a vehicle to sell, whether you choose to lease or not, now is the time to request a valuation.

Interested in Carparison’s best car lease deals? Browse our latest personal contract hire offers and business contract hire deals.