INVESTIGATION
Why semiconductor crisis could hit new car supply and make March even tougher for dealers Want chips with that? Nick Gibbs chats to traders and manufacturers about a problem centring on a tiny yet increasingly vital part of modern vehicles.
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ar dealers can add the potential of new model supply disruption caused by a shortage of semiconductors to their list of woes as they head towards the key plate-change month of March. Semiconductors, aka chips, are the brains behind the increasing number of smart features within today’s cars and they’re currently in very short supply. Car makers have been hit globally, including in Europe, and are slowing or even temporarily stopping production of key models for the UK. Affected plants already include Ford’s Saarlouis factory in Germany where it makes the Ford Focus, which has shut for an entire month from January 18 ‘as a result of the semiconductor supply issue’, the company said. VW stopped production for several days at its Wolfsburg plant in January, where it makes the Golf among other models. Audi has furloughed 10,000 staff in Germany for the issue and production has been hit at its Ingolstadt plant, where it makes the Q2, A3, A4 and A5. Also affected is Neckarsulm, which makes the A6 among other models. Mercedes has reportedly slowed and could cut production in two German plants: Bremen, where it makes the C-class, GLC and EQC among other models, and Rastatt, where it makes the A-class, B-class and GLA. Here in the UK, Honda has had to shut down production briefly at Swindon, where it makes the Civic, and has suffered shortages at its Jazz plant in Japan. The chip shortage is getting so bad that German bank LBBW predicted it could cause the global production of cars to drop this year by up to 2.2 million.
GLOBAL CHALLENGE
Nissan Sunderland has yet to be affected by the shortage, Nissan global chief operating officer Ashwani Gupta has said, but he added that it ‘was a global challenge for every manufacturer’. The problem first came to light in the last quarter of 2020, and while it’s slowly getting better, Gupta predicted that chip supply wouldn’t return to normal until May. The reason for the shortage is threefold, he said. Carmakers revised forecasts down because of the pandemic, while at the same time demand from the likes of smartphone makers and games console companies shot up. He said: ‘If I am a semiconductor manufacturer where I have just have 10 per cent for automotive and 90 per cent for non-automotive, and the 90 per cent is increasing and 10 per cent reducing, obviously I will allocate capacity to the 90 per cent.’ But demand for cars then recovered incredibly quickly after the first lockdown, coming on top of increased demand for the number of chips for each car. ‘The new Qashqai, which we will launch in Europe [this year], will have more than 50 per cent more sensors than it had before because of features like ADAS [advanced driverassistance systems],’ Gupta explained. Anecdotally, carmakers are focusing their limited chip supply on profitable models such 68 | CarDealerMag.co.uk
2.2m Cars that may not be made because of semiconductor shortage.
We the retailers have seen zero impact but that could be because the manufacturers stockpiled.
Daksh Gupta CEO of Marshall Group
