Published on April 7th, 2022 | by Sophie West
The supply issues with new cars seem to have lasted a lifetime and don’t seem to be easing throughout 2022. Figures by the SMMT from January show that car production is down by 20% in the UK with overseas production down by 17.5%. Many of these issues have arisen because of Brexit, COVID-19 and more recently the war in Ukraine.
A typical vehicle can have anything between 15,000 and 25,000 parts, which is a lot to bring together to make the final vehicle. It is therefore no surprise that from time to time supply chain issues can occur at some point.
Vehicle manufacturers tend to use a global supply chain to source the best quality part at the cheapest price. Even before the recent issues, we’ve been facing, the automotive industry has seen an impact on supply chains because of natural disasters. After the 2011 earthquake and tsunami in Japan, there was a noticeable disruption on a red paint pigment that was solely sourced in Japan. Floods in Thailand later that year meant a shortage in LCD screens for vehicle information displays.
It seems that the shortage of semi-conductors has plagued many industries. This is in part due to the high demand for phones and tablets, along with COVID-19 restrictions and staff shortages. It also didn’t help when one of the car industry’s biggest semi-conductor suppliers had a factory fire in March 2021, causing further delays.
Due to international supply chain issues and COVID-19 restrictions, factories haven’t been able to work at full capacity to match the demand in the market.
This all being said, we seem to be seeing a slight recovery as the industry comes to grips with the situation. Several manufacturers have now agreed on significant deals with large electronics manufacturers to ensure there is a consistent supply of semi-conductors well into the future.
The electrification of modern vehicles brings new challenges to the supply chain, with most notably a shortage of powertrain batteries. This is a relatively new component for cars and with all new components and supply chains, there are inevitably issues that need to be ironed out.
We are seeing a massive investment from many vehicle manufacturers in electric vehicles as the demand for lithium-ion batteries skyrockets. With this investment, we should hopefully see reduced timescales and cheaper production costs in the future. Volkswagon Group alone is looking to invest €2 billion in its own battery cell production within Europe, with a capacity of around 700 gigawatt hours by 2030.
It isn’t just the manufacture of the final product that has halted production. The mining of rare Earth metals such as nickel sulphate, a main component of lithium-ion batteries, also must be considered. Both Toyota and Tesla have signed an agreement with BHP, a mining giant, to secure these raw materials and secure future supply.
It’s not all doom and gloom. The industry knows of the issues it faces and are putting in procedures to overcome them. Unfortunately, the war in Ukraine threw a curveball into the mix for some manufacturers, disrupting assembly, component and material supply, which also now needs to be overcome.
Like many fleet companies, we don’t hold stock, however, we do have long standing relationships with manufacturers and dealers who update us on stock every day. This means that we still have the capacity to find stock vehicles for you. We will also do the leg work and use our connections to find you a vehicle.
Give the friendly team a call on 01527 571 605 or email info@agilityfleet.com.
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