Frequently Asked Questions for consumers relating to the semiconductor shortage and its impact on the automotive industry.
The COVID-19 pandemic has disrupted supply chains across the world, with the automotive industry suffering from a major shortage of semiconductors.
After a COVID-19-induced lull in vehicle manufacturing during 2020 and early 2021, most manufacturing plants are now back up and running. However, this surge in production has been hampered by a lack of semiconductors, which are a vital component in infotainment systems, sensors, cameras and other vehicle functions. Depending on its size and complexity, the average car can have 50-1,000 semiconductors.
When automotive industry demand for semiconductors fell away in 2020, chip manufacturers focussed on other markets, which were seeing growing demand for consumer electronics and from the rollout of 5G.
There is very little spare capacity when it comes to semiconductor manufacturing. The constrained supply of these vital parts has meant that automakers – many of whom rely on low-inventory ‘just in time’ supply chains – have been caught out by the unexpected shortage.
But what is the impact of the semiconductor shortage on the automotive industry? What does it mean for you as a driver?
The below Q&A covers some of the most frequently asked questions that the BVRLA and its members are receiving on the topic.
A: The high levels of demand for semiconductors, across a huge number of industries at a global level, has caused the number of new vehicles being made by manufacturers to reduce. This means it is taking longer to fulfil orders as outputs from factories are down while demand for new vehicles is high.
A: The delays are widespread and having an impact on all manufacturers and vehicle types.
A: Estimates vary, but positive steps are being taken to rebalance the supply of semiconductors. It will take time for these improvements to filter through all industries and suppliers. As a result, lead times on new vehicles are expected to be longer than pre-pandemic levels throughout much of 2022, if not beyond.
A: Talk to the provider of your lease car to understand if there are any other vehicles that may be available to you sooner. You may have to compromise on the vehicle make, model, specification or age to get a vehicle more quickly.
A: If you already have a vehicle on lease, your provider may wish to discuss your next vehicle sooner to try and overcome the long lead times. It may be possible to extend your lease, although this will require new terms to be set out in advance to protect both parties.
You should discuss your options with your provider to understand what is possible and best meets your circumstances and requirements.
NOTE: Insurance policies are normally for a duration of 12 months. If you have extended your lease and need temporary cover, speak to your insurer to see if they can offer a short-term product, or look for an insurance provider who can provide temporary cover.
A: Yes, but it is important that you check the vehicle when taking delivery to ensure the level of equipment and quality is consistent with your expectations. In some cases, features are not as previously advertised; it is important you are happy with the vehicle prior to accepting delivery.
A: The vehicle rental sector is facing major challenges with both the availability and cost of new vehicles. As a result, they are having to run with smaller rental fleets and extend their operating cycle. The end result for customers is that they may be offered a slightly older vehicle, have less choice, and need to book further in advance to guarantee availability.
A: Like the wider tourism sector, car rental prices will be adjusted to reflect supply and demand trends, so we advise customers to book early and be willing to compromise on what type of vehicle they get.
Prices will reflect the availability and cost of new vehicles, but car rental continues to offer great value when considering the overall cost of the vehicle you are hiring and the travel freedom it provides.
A: Be as flexible as possible on the dates and duration of your booking, as well as the vehicles you are looking at. Beyond that, it may be necessary to consider alternative options, such as those presented by car clubs or vehicle subscription programmes.
After an accident
A: Your eligibility for a courtesy car will be outlined in your insurance documents and remain at those terms until the policy ends. It may be that an alternative vehicle – based on make, model or class – will be provided to keep you mobile in the short term. If you are unhappy with the vehicle offered, talk to your insurance provider about potential alternatives.
A: You will be offered a replacement vehicle as close to the size and specification of yours as is possible. The primary purpose of a courtesy vehicle is to keep you mobile while your vehicle is off the road. As a result, a short-term compromise may be required ahead of a more suitable alternative being available.
You should talk to your insurance provider to discuss your needs.
A: This will be determined by your insurance policy, but generally a courtesy car should be returned within seven days of a case having been settled – either by your vehicle being returned to you or a cash settlement being provided in the case of a ‘total loss’ (write off).
After that point, you will be expected to make your own arrangements.