Vehicle shortage and what that means for the industry

The pandemic caused many changes in the way many businesses and people operate, one big impact of the pandemic was the massive shortage of microchips. These microchips are for everything from microwaves to vehicles, it had such an impact that some businesses had to scrap ideas and redesign items to overcome the shortage.  

For some industries such as the motor vehicle industry, microchips are required, and they have led to a backlog of vehicles and increased costs on new and old vehicles. And with a major earthquake in Japan occurring, it has the possibility to only exacerbate the ongoing global microchip shortage, as now the total number of vehicles removed from production plans this year has surpassed 1 million mark.

What caused the global microchip shortage?

Well this caused by a multitude of reasons, the biggest three reasons being -

1. When the pandemic began and lockdown restrictions were announced many vehicle manufactures paused and cancelled their orders for microchips. Believing that the demand for new vehicles would decrease drastically and they could save spending but that was untrue the demand did not drop and orders for microchips became backlogged. *Microchips are used in vehicles for electronic dashboard and new cutting-edge safety features. Without them, many manufacturers have had to slow and even stop production. In March 2021 one of the car industry's biggest computer chip suppliers warned that a major fire at one of its factories in Japan have the possibility to have a "massive impact" on its ability to fulfil orders.

2. The increased demand for electronic products, during the lockdown many people began searching for new things to entertain themselves and occupy their newfound free-time. This increased demand led to backlog built-up that was only increased due to the delay on getting the chips needed for computer and electronic devices.

3. Issues with the supply chain have led to a backlog and a problem with access to computer chips. The impacts of the pandemic have had global supply chain issues. It’s not just that there aren’t enough computer chips to go around; it’s also hard for facilities and factories to get them. When shipping ports shut down early in the pandemic, it caused a bottleneck type backlog of cargo and, when they reopened, that left a stack of cargo waiting to be shipped. The supply chain still hasn’t recovered, and labour shortages worldwide haven’t helped. Unfortunately, these problems aren’t expected to resolve themselves anytime soon. “I believe honestly it’s going to be at least another year or two if not more … I think it is going to go beyond 2022,” Nabil Sultan, divisional senior vice president of Emirates SkyCargo

In the vehicle sector, many companies are dealing with a shortage, at TCH we have been lucky and planned the foresight to ensure that we have a fleet of vehicles ready to hire for business and personal needs.