Luck is not on the side of the automotive industry, for a year now we can only hear that car production has been in a huge crisis. You have to expect longer production times and, unfortunately, more and more expensive prices. Changes in chip production have had a major impact on automotive manufacturing.
Below, we’ve gathered the most important information about the big chip crisis, as well as gathered tips on what we can still do in this situation if we need a car.
The Beginning Of A Chip Shortage
As part of the service, the newly purchased vehicle will be delivered to the customer for several years (determined in advance by contract). The purchased car is owned by Budget, but the renter has the right to use it for a specified period of time. It is important to emphasize that in the case of new cars, we order the vehicles according to the needs of our customers, with the equipment and design they want.The main cause of chip deficiency was the appearance of the coronavirus epidemic. Because the livelihoods and jobs of many were at risk, people could not afford to buy a new car. And thanks to covid, work from home has become more widespread, so people have left home less As a result, demand for cars has plummeted.
As demand for cars has declined, car factories have optimized their production, reducing the number of vehicles produced. The chain reaction of this was that they had to cancel a lot of semiconductor orders, which had a big impact on the chip factories. These companies had to find another way to maintain profits, so they switched to producing chips for other sectors. (As a result of home office and distance education, there has been an increase in demand for home electronics devices - laptops, mobile phones, various displays,… - so the canceled orders from the automotive industry have been redirected to this sector.)
Appearance Of The Problem
Both manufacturing sectors appeared to have coped well with the changes caused by covid. However, demand for cars recovered faster than most expected. Life began to return somewhat, people went back to work instead of home office, schools opened, but due to the constant presence of the epidemic, many people chose the car instead of public transportation. However, semiconductor factories were not prepared for this, they adapted much more slowly to the re-established situation.
Depending on the equipment and propulsion, a car contains about 100-200 chips on average, but that number can be many times higher for electric vehicles. From the engine controller to the air conditioner, even the window lift system uses a microprocessor. It was a big problem that the delivery process for semiconductors was slowed down and the completion of the cars depended heavily on them.
Changes Caused By The Crisis
Due to the fact that it is more difficult to obtain the necessary parts, car factories have changed their strategy and it is becoming more and more common for cars to be made to order instead of being made to stock. An car contains on average about 30,000 different parts, not only the purchasing process but also the price is constantly changing. Due to the increase in global raw material prices, a price increase of 4-5% for new cars and up to 15-20% for the used car market is expected next year.
Our Advice Before Buying A Car
It’s worth thinking not only about new cars, but also looking around among used vehicles, as you can also catch cars in excellent condition. It is true that a price increase is expected there as well, but it is still cheaper to get it than if we ordered a new car. Also, don’t forget that they are immediately available, which can be leased for up to several years.
If we still stick to new cars, it is very important to plan ahead. If our company cars are already old the replacement is necessary and we know the exact plans for next year, then it is definitely worth ordering the cars you look for as soon as possible, as you have to wait a long time. (For some brands, the planned production time is 3-5 months, while for others it can be up to 12-14 months.)
If your company is also about to choose a car, take a look at our new and used car long term offers. Fill out our short needs assessment form so that our colleague can contact you with a personalized solution.