What is actually happening at car manufacturers right now?
Discussion
Does anyone know what this microchip shortage looks like behind the scenes, has production completely stopped?
Or, have they half built all the cars apart from the parts which require the microchips and therefore when the shortage lifts we see a surge in new cars hitting the road?
I'm trying to figure out if the used market is going to take a sudden drop or if cars will gradually depreciate at the same rate they always have.
Or, have they half built all the cars apart from the parts which require the microchips and therefore when the shortage lifts we see a surge in new cars hitting the road?
I'm trying to figure out if the used market is going to take a sudden drop or if cars will gradually depreciate at the same rate they always have.
Not an insider but I find it very hard to believe that manufacturers would be half-building cars and then storing them to add in additional parts - Given that the whole process through the factory is heavily thought out and choreographed, they're not going to start forklifting in half built cars to specific parts of the floor to continue the journey.
I believe for a while BMW wouldn't build anything that had the Tech Pack (Or perhaps the Tech Premium) because they simply didn't have the chips available or those that were available had been prioritised for higher margin vehicles. If you ordered a car with these packs you were just put on an indefinite waiting list.
As it stands, I don't believe any of the major manufacturers have got vertical integration with a chip manufacturing plant and the chips that the car industry buy are relatively low-margin for the manufacturers, so whilst the supply is limited they're at the bottom of the queue and they can't just build their own chip manufacturing plant overnight.
Without a crystal ball you've got little to no chance of accurately calculating what direction used/new car prices are going to go and it's probably not worth being too concerned about.
I believe for a while BMW wouldn't build anything that had the Tech Pack (Or perhaps the Tech Premium) because they simply didn't have the chips available or those that were available had been prioritised for higher margin vehicles. If you ordered a car with these packs you were just put on an indefinite waiting list.
As it stands, I don't believe any of the major manufacturers have got vertical integration with a chip manufacturing plant and the chips that the car industry buy are relatively low-margin for the manufacturers, so whilst the supply is limited they're at the bottom of the queue and they can't just build their own chip manufacturing plant overnight.
Without a crystal ball you've got little to no chance of accurately calculating what direction used/new car prices are going to go and it's probably not worth being too concerned about.
I don't really know much about car manufacturing as I'm not in the business, but there definitely won't be "half built cars" just lying about in the factory.
These cars plants employ a production method called "just in time" or "lean" production, so virtually nothing is ever sat about in the factory waiting to be used. They will just downscale production accordingly, based on what parts in the supply chain are available.
These cars plants employ a production method called "just in time" or "lean" production, so virtually nothing is ever sat about in the factory waiting to be used. They will just downscale production accordingly, based on what parts in the supply chain are available.
J1990 said:
I believe for a while BMW wouldn't build anything that had the Tech Pack (Or perhaps the Tech Premium) because they simply didn't have the chips available or those that were available had been prioritised for higher margin vehicles. If you ordered a car with these packs you were just put on an indefinite waiting list. .
Audi is the same, Made some enquiries around an A6 ... Cannot order one with Heads up Display or Adaptive cruise (Or couldn't last time i checked a few weeks ago) , They weren't "part building" but were just saying , you can have one, just not with these options. No waiting list offered by Audi either.
georgeyboy12345 said:
I don't really know much about car manufacturing as I'm not in the business, but there definitely won't be "half built cars" just lying about in the factory.
These cars plants employ a production method called "just in time" or "lean" production, so virtually nothing is ever sat about in the factory waiting to be used. They will just downscale production accordingly, based on what parts in the supply chain are available.
Dacia Dusters have been coming through without the Medianav system, these normally factory fit items are being retro fitted once in the UK, however there had been a delay of a month or so whilst waiting for the units to come through, thus leaving a huge amount of cars just sitting at the import centre. These cars plants employ a production method called "just in time" or "lean" production, so virtually nothing is ever sat about in the factory waiting to be used. They will just downscale production accordingly, based on what parts in the supply chain are available.
rjfp1962 said:
Think I read somewhere that Mini's and BMW's can't be specced with upgraded Harmon Kardon hi-fi systems?!
Yes that's correct, and they've stopped building the digital dash too (won't be missed by many), but otherwise production at Oxford continues.Ford are totally shut in cologne at the moment a dealer told me when I enquired about a Focus
AudiMan9000 said:
Factories will also be affected by lockdowns/closures, staff isolating due to infection/being a close contact. I don’t see used car prices reverting to normal for a long time.
Plus most factories shut down for at least 1 week during the European summer season anyway.I agree, I think it'll be at least a year before new car supply is normalised and that has a knock-on effect in reducing used car prices.
AlexNJ89 said:
This may just be my imagination, but the spec and quality of used cars on the market right now is appalling.
They so often have missing desirable features, not well looked after or have a weird spec that no one wants.
Cheap lease deals = no optional extras.They so often have missing desirable features, not well looked after or have a weird spec that no one wants.
I leased a Volvo estate with no parking sensors, let alone a camera.
We have vans at import centre that haven't completed build, customers have the choice of waiting or taking them now without navigation, telecommunication and various other features not working. At some stage they will be asked to come in to the dealer network for work to make these features go live, but nobody knows when that will be
Mercedes are doing the same with their cars - delivering them without the comms module and plan to retrofit later if the customer agrees.
The chip shortage isn't going away any time soon. If you place an order today for certain WiFi chips fitted in anything from a phone, wireless AP to a car they will be delivered in 2023 with no option to improve on that time regardless of how much you're willing to pay.
To get from the raw materials to a finished chip actually takes between 6 and 15 weeks depending on the technology and so production schedules are not easily changed. It takes years to bring new fabs (factories) online so there is no quick way to scale up production. Existing fabs have downtime due to maintenance and some have been affected by natural disasters which has reduced capacity or closed them entirely.
Once you've got chips from the fab they then need to go through another production process to build the board or module which have multiple chips on it, so if any one of those is delayed production stops dead.
Car manufacturers are several stages removed from the chip production process because they'll be buying complete modules from an OEM who buys boards from a manufacturer in the Far East, some components will have multiple boards from different manufacturers in them and again if one is delayed it breaks the chain.
The same manufacturer will be making modules for all kinds of different things and will be prioritising their customers - tech companies buy in far greater quantities than car OEM's do, so despite the car manufacturers themselves being large and powerful they actually carry very little clout in the electronics world. If you're a manufacturer who has to decide whether you're making WiFi AP's for Cisco who buy a million units a month or comms modules for a car manufacturer who's only buying a few thousand a month and wants them delivered JIT it's clear which supplier is going to get preferential treatment. The big tech companies bulk order their chips well in advance but even they have been caught out - production hasn't stopped but gear like switches and WiFi you'd normally get in a week or two is now on 150 days lead time.
The chip shortage isn't going away any time soon. If you place an order today for certain WiFi chips fitted in anything from a phone, wireless AP to a car they will be delivered in 2023 with no option to improve on that time regardless of how much you're willing to pay.
To get from the raw materials to a finished chip actually takes between 6 and 15 weeks depending on the technology and so production schedules are not easily changed. It takes years to bring new fabs (factories) online so there is no quick way to scale up production. Existing fabs have downtime due to maintenance and some have been affected by natural disasters which has reduced capacity or closed them entirely.
Once you've got chips from the fab they then need to go through another production process to build the board or module which have multiple chips on it, so if any one of those is delayed production stops dead.
Car manufacturers are several stages removed from the chip production process because they'll be buying complete modules from an OEM who buys boards from a manufacturer in the Far East, some components will have multiple boards from different manufacturers in them and again if one is delayed it breaks the chain.
The same manufacturer will be making modules for all kinds of different things and will be prioritising their customers - tech companies buy in far greater quantities than car OEM's do, so despite the car manufacturers themselves being large and powerful they actually carry very little clout in the electronics world. If you're a manufacturer who has to decide whether you're making WiFi AP's for Cisco who buy a million units a month or comms modules for a car manufacturer who's only buying a few thousand a month and wants them delivered JIT it's clear which supplier is going to get preferential treatment. The big tech companies bulk order their chips well in advance but even they have been caught out - production hasn't stopped but gear like switches and WiFi you'd normally get in a week or two is now on 150 days lead time.
Dan_1981 said:
I can assure you all that vehicles frequently do come off the line incomplete.
Potentially not however with microchip issues as many of them are in components that are not as easy to 'retrofit' or continue to build past.
They do, but usually for short term issues, a quality issue or if somethings gone wrong on the line, they have small rectification areas. But nothing in the terms of the area needed for the chip shortages. I think the days of fields of part-finished cars are long gone.Potentially not however with microchip issues as many of them are in components that are not as easy to 'retrofit' or continue to build past.
I still find it hard to believe that the purchasing departments of all these OEM companies have dropped the ball so badly on this. Apparently telling the chip manufacturers they don't want the volume so the manufacturers sell to someone else (entertainment systems allegedly) and now the vehicle OEMs come begging for their supplies back, the chip manufacturers don't have the volume.
Given the lead time on setting up the manufacture again, perhaps with a different supplier you think they'd have cut their purchases by say 50% and stockpile what they don't use, then would have enough stock to cover the ramp up to 100% supply again. Or am I overthinking it...
Gassing Station | Car Buying | Top of Page | What's New | My Stuff