Semiconductor shortage
Relevant information about the situation
A worldwide problem affecting many industries, including the automotive industry
The Covid-19 pandemic caused a perfect storm for the automotive industry. At its peak, restrictions to control the virus reduced vehicle and component production worldwide. Alongside showroom closures, European car registrations almost halved during the first six months of the year.
Demand is increasing, but supply is struggling
Carmakers purchased fewer semiconductors (micro-chips) to match the reduced demand for new vehicles, just as demand surged for home computing, gaming and healthcare products. When semiconductor manufacturers restarted their (reduced) production, the limited volume available had already been prioritised elsewhere. This lead to supply problems as automotive markets picked up again. Demand for semiconductor-reliant technology has been increasing, but supply is too low. The semiconductor shortage is a worldwide problem affecting many industries; including the automotive industry.
It may have an impact on your order
In cars, semiconductors used in critical functions through to added extras on a vehicle – such as a display, an infotainment system or a sensor. At best, a shortage could cause some trim levels or optional equipment to become unavailable. At worst it could stall production of an entire model line. It is a particular challenge for an industry which tends not to hold much stock inventory. Due to this shortage, delivery times of new cars can increase, and it may have an impact on your order.
Frequently Asked Questions
What are semiconductors? Semiconductors are the foundation of the memory and processor chips found in almost every electronic device. Many recent innovations in vehicle development rely on them. Semiconductors or microchips are more and more present in many areas of modern life.Why is there a shortage? The global market for semiconductors is growing rapidly again whereas supply is limited. In short: the shortage is the result of the earlier massive cancellation of chip orders by car manufacturers when demand for cars collapsed, mainly due to the covid crisis. As demand for new cars recovered faster than expected, car makers were not first in line as global demand for chips from other sectors had grown in the meantime.How does the shortage of semiconductors affect the delivery time of cars? Car manufacturers are not able to make enough cars due to the semiconductor scarcity. Cars only account for less than 1% of all connected devices so other sectors have a much stronger buying position; this results in a direct disadvantage for the automotive industry. The shortage is a global problem impacting al industries, not only automotive.Is it possible to place new orders? Yes and we’re here to support you! We suggest ordering your new vehicle earlier than usual. We can guide your car and option selection to minimise delivery delays based on the information we have at the point of order.How are existing orders affected? The semiconductor shortage may impact your order, either in delivery time or in some options as car manufacturers change or optimise their production.Will the shortage affect vehicle lead times? Lead times could be affected since there are many variables. This depends on the brand, dealer, vehicle and options.As a fleet manager: How can I minimise the negative impact to my fleet? LeasePlan is here for your support. These are some options to consider: - Place orders as early as possible: we advise nine months before expiration date - Electrify your fleet quicker, as OEMs prioritise low and zero emission vehicles - Assess what equipment is needed when ordering a vehicle - Explore widening the scope of Brands/OEMs in the company car policy - Shorten the duration of your car policy (to more flexible)Further reading
Further questions?
If you as a fleet manager have questions or want advice on this, you are welcome to contact your customer advisor.