Semiconductor shortage and parts manufacturing in Ukraine
As you may already know from the headlines, there is now a global shortage of semiconductors, more commonly known as microchips, that are essential to many of a vehicle's standard features, controlling everything from starting to stopping and all the electrical functions in between. A typical vehicle might have more than one thousand of these semiconductors.
As a result of this shortage, many manufacturers are experiencing a significant impact on their ability to build new vehicles, and lead times for delivery are now being extended.
The crisis in Ukraine is also disrupting supply of certain components, which may lead to delays as suppliers work to mitigate the impact.
The problem isn't limited to one manufacturer or one vehicle, although it's clear that different manufacturers are tackling the problem in different ways. Some are reducing vehicle functionality, for example by removing 'standard' specification items. Other manufacturers are using their chips to build higher specification models that presumably have better profit margins, so that vehicles can still roll out of the factory and keep cash flowing.
At the same time, we're seeing all manufacturers reduce vehicle discounts, but you shouldn't worry about this too much if you already have a vehicle on order because so far, manufacturers have been continuing to honour the price at which the vehicle was ordered, however that does mean that looking for an alternative deal is invariably now more expensive.
Because of the limited supply situation, used-vehicle sales and values have now surged, with many used cars and vans now even more expensive than new.
We appreciate the concern and frustration that all of this may cause but we are advising customers to remain patient knowing that they are in the queue, and that as long as manufacturers continue to honour agreements, our customers will ultimately take delivery of their new vehicle at the price agreed.
We do understand that some customers may want to cancel, but would strongly urge them to consider that, with a return to 'normal' not expected until at least late 2023, cancelling now means they would miss out on their position in the queue, which will just be immediately snapped up by someone else.
All that said, there are alternative options. There are still some vehicles available, and some do have shorter lead times than others, so it might be possible to swap into something that could come sooner. If you have a vehicle on order, your account manager is on hand to help you look at all of your options.
If you are nearing the end of an existing vehicle finance contract, it should be possible to extend the agreement or refinance it. Our end-of-contract team will be able to help with this.
As we receive delivery updates from manufacturers, we will continue to keep our customers up to date in the usual way by sending a text and e-mail every week, passing on that delivery information verbatim in absolute good faith as we always do. However, it's worth noting that it's not unusual at the best of times to see these dates going backwards and forwards throughout the production process, and we expect this to be quite volatile because of the semiconductor issue, with the updates sometimes getting worse, and then coming back in line.
The team are here to advise you and help you with all the options, so please don't hesitate to contact us to discuss this in more detail.
Thank you for your understanding and patience. We will continue to work hard for our customers, helping them plan their next steps and stay mobile.