Recently, carmakers are doing all they can to hamper the economic recovery; thereby, they curtail production. Around the world, there has been silence in the auto assembly lines, which is making worker idle, and the parking lots of dealership is looking empty.
Semiconductors are undergoing shortage; there has also been upended auto manufacturing in the time but critical chips used for calibrating cars fuel injection to provide the brain for cruise control. A warning came from a group of German economic research institutes of how it has become a massive problem for manufacturers, especially concerning the shortage of chips.
Therefore, we will look into how the global chip shortage affects the car leasing market.
In February in Kansas City, there was a General Motors plant that closed because they did not have chips, and till today they haven’t reopened. Mercedes-Benz has temporarily shut down factories that produce low-priced C-Class sedans because it has started hoarding its chips for expensive models.
In the U.S.A., dealers were warned by Porsche. The warning was about customers who would have to hold for an extra 12weeks to get their cars, which was due to lacking a chip used for monitoring tires’ pressure. Peugeot, who was the French automaker, and is a part of the Stellantis auto-making empire that is newly formed, has gone far as to change the old-fashioned analog speedometer to digital units in some models.
There has been a strong bounce-back of demands of cars from the slump of the pandemic, and the money that consumers saved during the past years they are now ready to spend it all because they are determined to avoid airplanes by using road trips. Carmakers are in a difficult position because they have been deprived of semiconductors for them not to make up for the lost sales they have encountered.
Renault, one of the automakers, has started to triage their chips, which he is keeping for expensive models so that they can gain much profit. The deputy chief executive of BMW, said that they are doing their best to find a smart way to prioritize cars that are higher in margins.
Some purchasers are sometimes lucky to take a new car to their home, but unfortunately, it may lack some options that specialized chips use. Porsche has warned the U.S. car dealers that they will not be able to deliver high-end seats in the Porsche Macan SUV, which has over 18 different ways to adjust it, which is a popular upgrade. But the necessary chips are unavailable.
In everything, there is always the main reason for all things. The big issue why automakers have not been able to get enough chips is because of where the priorities of semiconductors manufacturers have been put. They have given manufacturers of smartphones, video games, consoles, and other consumer electronics their priority because customers have found them to be more lucrative.
You can easily see more than 3000 chips in a modern car. But, most cars account for any fraction of chip demand. Taiwan Semiconductor Manufacturing Co. is one of the few makers of different chips that are valuable to the auto manufacturer. But, a member of a German consulting firm by the name Ronald Berger said that carmakers generated 3% of company sales during 2020
TSMC’s most important customers are smartphone makers, which accounted for half of the sales. Smartphones exceed cars by a mile. In 2019, precedent to the pandemic disrupting global economy, automotive factories produced 93 million vehicles as against smartphone production of 1.4 billion units.
In a nutshell, auto manufacturers’ priority has been in smartphones and other electronics of consumers. And, the outcome has dramatically affected the shortage of chips, making it have a substantial effect on the car leasing market.
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