What is actually happening at car manufacturers right now?
Discussion
Dashnine said:
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...
Toyota wasn’t caught out. Through other disasters, they discovered the supply of chips isn’t elastic and started to stockpile them for adverse events. They only ‘just in time’ parts that have multiple suppliers.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...
https://www.bloomberg.com/news/articles/2021-04-07...
matrignano said:
How did the chip shortage actually start/happen?
Perfect storm of issues... This is the video on it from Cold Fusion channel which is very good https://www.youtube.com/watch?v=AeN3oQx-o68&ab...
Shorter and less comprehensive version from Rory Reid https://www.youtube.com/watch?v=AeN3oQx-o68&ab...
wyson said:
Dashnine said:
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...
Toyota wasn’t caught out. Through other disasters, they discovered the supply of chips isn’t elastic and started to stockpile them for adverse events. They only ‘just in time’ parts that have multiple suppliers.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...
https://www.bloomberg.com/news/articles/2021-04-07...
Fast Bug said:
Hugo Stiglitz said:
So the used market will be boyount until the end of the year.
And easily in to next yearIt's gone up about a grand in the last year or so.
Think I might at least wait until Xmas time, it went up £690 just in the last two months.
Crazy times.
AlexNJ89 said:
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.
Ford have halted Focus production in order to keep Transit lines open as its the best selling vehicle in the UK right now.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.
This article from Reuters seems to be a little more upbeat about the chip shortage situation.
https://www.reuters.com/technology/car-chip-shorta...
For those unable to access the full article
It seems to be that they now have a grip on the vehicle chip shortages and are giving them priority at the expense of other sectors such as Smartphones, Taiwan where most of these chips come from have been moving their focus solely to vehicle chips and China picking up the slack with chips for other products.
Obvouisly there will be a backlog and things will not happen overnight, and there will still be shortages in 2022 for many products, but the vehicle market issues should be resolved in the coming months. So I guess it depends on how vehicle manufacturers have set up in readiness for chip supplies to feed through and how quickly they can turn these vehicles around.
Provided that nothing else crops up I guess by year end we should start to see new vehicle production back to normal, orders being placed now being confidently fulfilled.
As for the used market then its a simple knock on effect, if 200k new vehicles get delivered, they in many cases replace 200k existing vehicles that end up on the used market, people are holding on to the decent stuff or extending their leases / PCP agreements until they can replace them with a vehicle they actually want.
Not sure what it's going to look like, but safe to say that used car values are going to drop, quite heavily on some models I guess as prices on used vehicles at the moment are very close to new prices, and that is without the normal discount you can get on a new vehicle (PCP contributions etc), people just seem to be fighting over scraps at the minute.
https://www.reuters.com/technology/car-chip-shorta...
For those unable to access the full article
It seems to be that they now have a grip on the vehicle chip shortages and are giving them priority at the expense of other sectors such as Smartphones, Taiwan where most of these chips come from have been moving their focus solely to vehicle chips and China picking up the slack with chips for other products.
Obvouisly there will be a backlog and things will not happen overnight, and there will still be shortages in 2022 for many products, but the vehicle market issues should be resolved in the coming months. So I guess it depends on how vehicle manufacturers have set up in readiness for chip supplies to feed through and how quickly they can turn these vehicles around.
Provided that nothing else crops up I guess by year end we should start to see new vehicle production back to normal, orders being placed now being confidently fulfilled.
As for the used market then its a simple knock on effect, if 200k new vehicles get delivered, they in many cases replace 200k existing vehicles that end up on the used market, people are holding on to the decent stuff or extending their leases / PCP agreements until they can replace them with a vehicle they actually want.
Not sure what it's going to look like, but safe to say that used car values are going to drop, quite heavily on some models I guess as prices on used vehicles at the moment are very close to new prices, and that is without the normal discount you can get on a new vehicle (PCP contributions etc), people just seem to be fighting over scraps at the minute.
Edited by Theoldguard on Friday 23 July 10:35
wyson said:
Toyota wasn’t caught out. Through other disasters, they discovered the supply of chips isn’t elastic and started to stockpile them for adverse events. They only ‘just in time’ parts that have multiple suppliers.
https://www.bloomberg.com/news/articles/2021-04-07...
Toyota still fit CD players. They aren’t exactly cutting edge when it comes to tech.https://www.bloomberg.com/news/articles/2021-04-07...
A friend who works for a large manufacture in buying told me the other day. Most are not massively worried about chips. Its the steel thats going to be a bigger issue. As They cant buy it quick enough and companies are basically selling to the highest bidder at the ports. Like the old spice markets.
J210 said:
A friend who works for a large manufacture in buying told me the other day. Most are not massively worried about chips. Its the steel thats going to be a bigger issue. As They cant buy it quick enough and companies are basically selling to the highest bidder at the ports. Like the old spice markets.
The price of steel is very high at the minute and suppliers are fully loaded with demand until end of the year. However when it comes to supplying the automotive sector these are usually established forward contracts of supply agreed months in advance for x tonnes. Not aware of many car manufacturers who buy on the open market at spot price.
I guess where your friend may be coming from is when these contracts end and bidding wars start for the next production run.
I have a bit of insight, my company is owned by a manufacturer and we do new car logistics, parts logistics and general automotive work for them. I also drive a manufacturer scheme car - Tenuis I know 
Production is down on most models due to the chip shortage, this is resulting in models being reduced especially coming into the UK (for my company anyway).
Most Vans / commercial vehicles are being pushed to 2022 build as cars make more money.
Our scheme was held for new orders in April, we were told this would be short lived but its still not possible to order a new car, they have implemented servicing now which hardly ever happened before (6k 8 month change cycle normally but order at 3k and 4 months).
I have an order in from March and its still not got a build slot (retail take priority) UK compounds are pretty much empty and there are no unassigned vehicles in the UK compounds for us currently. This has never been the case before.
We have been told unofficially that for us to re order a car will likely be October for deliveries in 2022.
Previously from order, even factory to picking it up was 6 weeks on average.
Like I said Ii only work there and its what I hear, we have no production sites in the UK to ask so relying on the grape vine here.
I know an ex colleague at JLR and they are having extended line stops due to parts and general availability.
Production is down on most models due to the chip shortage, this is resulting in models being reduced especially coming into the UK (for my company anyway).
Most Vans / commercial vehicles are being pushed to 2022 build as cars make more money.
Our scheme was held for new orders in April, we were told this would be short lived but its still not possible to order a new car, they have implemented servicing now which hardly ever happened before (6k 8 month change cycle normally but order at 3k and 4 months).
I have an order in from March and its still not got a build slot (retail take priority) UK compounds are pretty much empty and there are no unassigned vehicles in the UK compounds for us currently. This has never been the case before.
We have been told unofficially that for us to re order a car will likely be October for deliveries in 2022.
Previously from order, even factory to picking it up was 6 weeks on average.
Like I said Ii only work there and its what I hear, we have no production sites in the UK to ask so relying on the grape vine here.
I know an ex colleague at JLR and they are having extended line stops due to parts and general availability.
wyson said:
Toyota wasn’t caught out. Through other disasters, they discovered the supply of chips isn’t elastic and started to stockpile them for adverse events. They only ‘just in time’ parts that have multiple suppliers.
https://www.bloomberg.com/news/articles/2021-04-07...
BBC reporting that Toyota are cutting global production by 40% in September - 540k instead of 900k.https://www.bloomberg.com/news/articles/2021-04-07...
Looks like their stockpile has run out.
Gassing Station | Car Buying | Top of Page | What's New | My Stuff