What's causing the long delivery times?
‘Patience is a virtue’. This proverb has never been more relevant, now that delivery times of new cars have risen from the usual two to three months to a year or more. What is causing delivery times to be so long? What advice does LeasePlan give?
Cause 1: chip shortages
Due to COVID-19, the world went into a lockdown in 2020. As a result of this, the production of semiconductors for cars was greatly reduced, as car production went into a standstill, due to cancelled or sharply reduced orders. Semiconductors are necessary in the car's electricity.
At the same time, chip manufacturers saw increased orders from the consumer electronics industry. Working from home caused the demand for monitors, laptops, cameras, televisions, game consoles and smartphones to skyrocket.
When, after a while, the demand for cars rose again, car manufacturers were no longer the chip suppliers' most important customers. The production capacity that had been allocated to them in the pre-corona era, had meanwhile been reallocated to other customers. Add to this, a major fire in one of the most important chip factories, and it is easy to understand how a dire situation got even worse.
In addition, the automotive sector mainly uses so-called "legacy semiconductors". These are older and less high-tech chips. Chip manufacturers prefer to invest in production lines for the very latest and more expensive semiconductors, as they are more profitable.
Cause 2: cables from Ukraine
While the chip crisis has not yet been resolved, the automotive sector is facing an additional supply problem. In many cases, car manufacturers rely on Ukrainian-based producers and suppliers of wires. LEONI, for example, is the largest manufacturer of wires used in cars. Because of the war in Ukraine, LEONI’s factories have closed or are producing at a lower rate, and the export of the goods produced has become difficult.
As a result, many car manufacturers in Europe have temporarily had to shut down plants and reduce production, which only prolongs the already long delivery times. As it is currently unclear when production of wires will return to normal in Ukraine, car manufacturers are trying to find other suppliers of wires, but these struggle to meet the extra demand.
Place your orders in advance
Due to the shortage of chips, on the one hand, and of wires, on the other, manufacturers cannot currently guarantee, that the car you order, will be delivered on the expected date.
Unfortunately, as a leasing company, we are not able to influence the problems. At LeasePlan, we do everything we can to closely monitor current orders and provide the right solutions. If your leased car is still in good order, an extension of the existing leasing agreement is a sensible solution, until the delivery of the new car is available. Also, try to anticipate and order your vehicle(s) at least a year in advance.
At LeasePlan, we will monitor the situation closely and keep you informed.
