Semiconductor Crisis: How Car Delivery Times Are Changing

Semiconductor Crisis

For some time now, the semiconductor crisis has put the entire technology sector in check, naturally including the automotive sector; although the global supply of chips is improving, there are still many sectors that are grappling with a series of corrective measures to mitigate the situation. The problem arose following the surge in demand for smartphones, tablets and personal computers at the height of the pandemic. In other words, smartworking has led to a growing demand for electronic components and the supply chain has not been able to constantly increase the supply, also due to the continuous lockdowns that have limited the shares of the companies involved. The situation is now aggravated by the war in Ukraine and the consequent stop to production in the Ukrainian factories and, consequently, in the Russian ones.

Modern cars are a real concentrate of technology and so are the cheaper and “spartan” solutions require the use of chips; It is in fact wrong to think that semiconductors are used exclusively to create advanced systems in the most expensive cars, they are also present in infotainment systems or, more simply, they are used to create the digital dashboards that can recently be found in almost all the latest models. br>
Some chips are simpler than others, and manufacturers, such as Bosch and Denso, to name a few, are able to manufacture them in-house. However, the more complex units known as microcontrollers pack significantly more processing capacity in an incredibly miniaturized package needed to power the onboard technology. Such a complicated implementation that IHS Markit estimates that 70% of all microcontrollers in the automotive sector are outsourced to only a few selected suppliers such as, for example, TSMC.

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Solutions in this regard are examined by both manufacturers and some governments are those to create a more capillary and dedicated production chain, a strategy that however requires numerous efforts, both economic and temporal. In this regard, Intel, one of the world's largest producers of “Made in USA” semiconductors, will make huge investments for production, research and development plants in Europe. Investments will mainly fall on Italy, France, Germany, Ireland, Poland and Spain, as decided with the "Chips Act".

To delay the crisis, all manufacturers have therefore taken action by eliminating some important accessories from the price lists and optional. Among the first to apply this strategy is Peugeot which, on some models, has returned to implement analog speedometers. But the plan was soon adopted by almost all the most famous players in the sector, from BMW to Mercedes, from Stellantis to the Volkswagen Group, leaving no one left out. Tesla, one of the few brands that has managed to better cope with the crisis, also recently removed (silently, without releasing any releases) some accessories such as lumbar support from the front passenger seat and the USB-C ports of the Model 3 center console. and Model Y. In the same vein, BMW has touchscreen capabilities on some models, while Mercedes has eliminated support for wireless charging on even the most premium models.

Delivery times

Supply difficulties semiconductors have led, inexorably, to a drastic slowdown in production and in some cases to a real "stop and go" of entire production lines. Consequently, the wait for the delivery of the cars has increased to reach 10 months. A Quattroruote survey, similar to a more recent one by AutoExpress, has highlighted, house by house, the delivery times of the main cars on the market, underlining a not very encouraging scenario.

3 months: Ford Puma, Jeep Compass Phev , Toyota Corolla, Volkswagen T-Roc, Volkswagen Tiguan, Alfa Romeo Stelvio, Hyundai i20, Nissan Qashqai; 4 months: Alfa Romeo Giulia, Audi A3 Sportback, Fiat Tipo 5 Porte, Fiat Tipo Station Wagon, Ford Ecosport, Lexus UX, Peugeot e-208, Peugeot e-2008, Toyota C-HR, Toyota Rav4, Volkswagen T-Cross, Volkswagen up !, Volkswagen up! eco move, Bmw X4, Bmw X5, Bmw X6, Fiat 500L, Opel Grandland X, Peugeot 208, Skoda Octavia Wagon; 5 months: Aud A4 Avant, Ford Fiesta, Ford Focus, Peugeot 2008, Peugeot 3008, Peugeot 5008, Toyota Yaris Hybrid, Audi A1 Sportback, Jeep Wrangler; 6 months: Audi A3 Sedan, Bmw X3, Ford Mondeo, Ford Mustang Mach-E, Hyundai Tucson, Nissan Lead, Skoda Octavia sedan, Toyota Yaris, Volkswagen Golf; 7 months: Audi Q3 Sportback, Audi A6 Avant, Audi Q7, Ford Focus, Ford Kuga, Ford Kuga EcoBlue Hybrid, Ford S-Max Hybrid; 8 months: Audi A6, Audi A7; 9 months: Audi Q5; 10 months: Audi A7 Rs, Audi Q3 Sportback. These are of course some models, as we know from previous investigations even the simplest solutions are affected by the same problem. Citroen Ami, the French electric quadricycle which became famous thanks to its low price, requires a waiting time of 15 weeks, practically 3 months. According to ANFIA (Italian Association of Automotive Manufacturers), the average waiting time for a new car has now tripled. Delayed times and accessories eliminated for new cars, what happens to km0 ready for delivery?

For the uninitiated, km0 cars are by definition proposals that are registered in advance by dealerships; they are mostly super-equipped show cars used to present the model to future buyers. They are considered "second-hand cars" and as such they generally have a significantly lower selling price than a new car with the same equipment. Despite this aspect, however, some market surveys have shown that the solutions ready for delivery are no longer so advantageous thanks to the presence of accessory packages now unavailable on the new fittings.


Credits: Carlos Aranda via Unsplash

Available yes, but only on order

In the past months, when ideally it was not yet possible to understand the scenario that would be encountered, many producers they found themselves with fleets full of proposals not yet fully finalized and therefore not ready for marketing. To overcome this problem, the manufacturers now seem more willing to limit the stocks of units available and radically change their strategy.

Perhaps for this reason and certainly also to raise the prestige of the brand, Alfa Romeo has declared that there will be important news on the availability and distribution front. The historic brand has in fact specified that km0 will be eliminated and that future solutions will only be available on order. A strategy that, as anticipated, would not only allow Alfa Romeo to improve its image but should also reduce the storage costs of unsold and unfinished cars.

Second hand market

Accomplice the limited offer on the new, second-hand market has undergone a real boom over the last few months with unexpected growth on all fronts. In this regard, an AutoScout24 survey has shown that in November 2021 buyers found themselves paying, on average, almost 20% more than in the same period of the previous year.

Similar situation also and above all for Tesla's electric ones which, according to what we observed in our brief analysis, would be in a real economic bubble. At present, thanks to a rather long waiting time on the new one, buying a used Tesla can be not very convenient. In fact, it is not uncommon to find used Model 3 with a price not too far from the new one, even net of the continuous price increases inserted by Tesla to its price lists, or the most recent Model Y at market values ​​practically identical to the new one (if not higher. !).

What will happen in the future

Once the crisis is over, presumably over the next year, the situation should slowly return to normal although several manufacturers have decided to change some sales strategies. In order to ensure greater transparency in the price and better manage stocks to avoid excessive market saturation, with consequent discounts to dispose of them and losses in value, Mercedes and Stellantis have declared that they will progressively move to a sales model closer to the concept. agency.

The distribution of cars has a consolidated scheme that allows the dealer to sell the cars to end customers thanks to the “concession” of the car manufacturer itself. The dealer is therefore a third party who buys from the manufacturer and resells to the end user with a certain margin, which is necessary to support himself and ideally also make money. The new "hybrid" model provides for a greater presence of the manufacturer and a reduction in the involvement of the dealer, a sort of "Tesla model" where the dealerships will have the functions of representing the brand in the area by offering services such as vehicle delivery and maintenance