What the global semiconductor chip shortage means for UK car buyers

Semiconductor chip shortages have taken their toll on the car market in 2020, 2021 and 2022, so prepare to wait for your new car to arrive.

Semiconductor chips

If you’re thinking about buying a new 22-plate car, we’d be amazed if you haven’t heard about the semiconductor shortage that’s hitting new-car supply. It’s a huge problem for the industry and consumers alike.

The shortage of these microchips reared its head in 2020 at the start of the pandemic and is still some way from being resolved, as anyone visiting their local new-car showrooms will attest. Why? Because most new-car outlets are currently so bereft of stock that you’ll likely be gazing at coffee-stained carpet tiles instead of shiny new metal on your shopping spree. 

It’s not Covid social-distancing that’s to blame for the less than crowded showrooms, but the pandemic certainly played its part in the chain of events that led to currently dismal displays of dealer stock. But where does that leave you if you’re looking for your next new car? We rang around all the major manufacturers for an update on the waiting times for key models and while some cars are available in a few weeks, orders placed for others are not being fulfilled for 6 months or more. The message for car buyers is to add; ‘how long will i have to wait?’ to the list of questions you ask before signing on the dotted line for a new car.

If you’re not prepared to wait and want to know what’s in stock at dealers now, it’s harder to pin down the situation. Most manufacturers told us that there are some new cars in the system that are available for immediate delivery, but in very limited quantities. If you aren’t too fussy on colour and spec, or you’re just lucky, you can still get a new car in very short order.

How long will the chip shortage go on for?

Experts predict the issue may take as long as two years to resolve but it’s not just the car industry that has been hit: everything from fridges and washing machines, to games consoles and laptops have been subject to supply limits.

Yet in the face of the global computing, phone and electronics industries, car makers are small fry. Roughly 89 per cent of revenue for one leading Taiwanese chipmaker comes from the computing, phone and ‘internet of things’ (connected devices such as smart TVs) industries, with car firms responsible for just three per cent. This puts car makers at a relative disadvantage as semiconductor makers prioritise their largest clients.

We asked Sue Robinson, chief executive of the National Franchised Dealer Association (NFDA) for her take, and she told us: “As the shortage of semiconductors is likely to continue to impact supply of new cars in 2022, research conducted by the NFDA suggests manufacturers have been prioritising electric vehicles to hit internal targets and Corporate Average Fuel Economy (CAFE) standards. As a result, although this varies depending on individual brands, lead times tend to be shorter for EVs.”

Mike Hawes, who heads the Society of Motor Manufacturers and Traders (SMMT) in the UK, told us: “The semiconductor issue is going to be tough in the first half of the year, but will ease and that should flow through to production output. I don’t think it will normalise because it will potentially still have an impact into 2023, but I think the general view is that the supply situation will improve, especially in the second half. In talking to some manufacturers there’s a bit more confidence in terms of that forecast than there was at the back end of last year.”

​​What is a semiconductor anyway?

We’re talking microchips. Tiny fragments of silicon crystal that are minutely lithographed and etched with microscopically small electrical circuits, and which process every task a modern car performs. Such is their ubiquity in today’s electronically overloaded automotive offerings that there can be up to 3,000 microchips in a single car. According to tech company ASML, there were 932 billion of the things produced in 2020, for use in every imaginable electronic device. The automotive industry accounts for around 15 per cent of the global market, while consumer electronics eat up 50 per cent.

Unfortunately, because there are many different types of microchip, produced by a diverse and relatively small manufacturing industry dotted around the globe, glitches in the supply chain can have far-reaching consequences. Covid, factory fires, bad weather and the US-China trade war are all said to have played a part in the shortage, and while the chip-manufacturing industry is bouncing back, the car companies are relatively small customers, who have to play second fiddle to consumer electronics firms.

New spec leads to bigger bill for car buyer

Reader Tim Roberts shared his experience of the semiconductor shortage, explaining he wanted a MINI Cooper Convertible and had chosen the specification, including the Digital Dashboard. Then, at the last minute, his dealer told him that MINI had changed the upgrade packages available, and instead of buying the £1,100 Navigation Pack to get the Digital Dashboard, he would have to spend £2,400 on the Navigation Plus Pack.

MINI said the shortage has had “a limited impact on the availability of some equipment”, and the Digital Dash “is now only available with Navigation Plus”. The firm added the pack also includes wireless charging and a head-up display, but warned: “it’s possible that further changes will still be required.”

Has you car purchase been impacted by the global chip shortage? Tell us about your experience in the comments section...

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