How will the microchip shortage impact the auto industry for years to come?

How will the microchip shortage impact the auto industry for years to come?

16 November 2021 | Kate Kozlowska | 4 min read

Several inevitable consequences have been triggered by the microchip shortage, most of which can't be solved in the short run. 

How will the microchip shortage affect the future of the auto industry?

Semiconductor shortage is an absolute nightmare for automobile manufacturers, and lessons learned will resonate throughout the automotive industry for years to come. The state of flux the industry is currently experiencing greatly influences these long-term effects as well. 

Vehicle manufacturers are increasingly adopting technology and software in-house to cope with the ongoing CASE (connected, autonomous, shared, and electric) transformation, so the sector is in a period of disruption.

Considering the chip shortage, automakers are increasingly forced to adapt to the current situation and tackle the future in a more efficient way.

For the moment, chipmakers are typically tier three or tier four suppliers to automakers, which means they take some time to adjust to changes affecting their demand.

Due to these factors, the automotive sector seeks to build a more connected supply chain ecosystem that can boost efficiency on several levels and mitigate future disruptions. In other words, original equipment manufacturers (OEMs) are regaining control as opposed to almost entirely depending on tier one suppliers - a challenge that will take years to overcome.

Prior to the pandemic, many auto companies had already begun strengthening internal software development in order to have a greater measure of control over the software that is incorporated into their products, as this is the determining factor for future profitability.

The move is impelled by the industry's desire to embrace the concept of software-defined vehicles in which features are defined or redefined via software updates, and hardware is driven by the software.

Combined with the lessons learned from the microchip crisis, this is driving automakers to improve their hardware and its requirements in a way that does not compromise software monetisation over a vehicle's lifetime.

The idea of original equipment manufacturers building their own chips is impractical, as their values are so low in comparison with those of the wider market. Many automakers will design their own microchips regardless, customising them to fit their needs. Tesla's microchip for its Full Self-Drive system is a great example of this. Furthermore, automakers may also begin to secure microchip manufacturing capacity.

Original equipment manufacturers will be able to secure microchip production capacity and have tighter control of manufacturing requirements if they are able to establish direct relationships with microchip makers (bypassing supplier layers). There is a good chance they will begin this new type of relationship with chipmakers with the most important chips. Since certain chips are so important, automakers will focus their efforts on gaining a competitive advantage in these.

To conclude, disruptive changes are rarely caused by one factor alone. Automakers will be forced to go even further with their plans to become tech companies after the microchip shortage.

 

It is clear that the vehicle leasing industry has been adversely affected by the microchip shortage, however, CVC continues to provide the best car and van lease deals to our customers. Having built a long-term relationship of trust with our suppliers, we are able to secure stock, even during these difficult times. Check out our current offers - we have vans, pickups, and cars in stock! 

Browse our vehicles in stock

 



Am I Eligible?

We work in partnership with many of the UK’s leading van leasing, car leasing, contract hire and finance leasing funding companies in order to provide the most competitive rates and offer you the best leasing deals possible. Our guide to eligibility will help you understand the various requirements for establishing a vehicle finance agreement.

Our Vehicle Ordering Process

Achieving the best van leasing deals and the best car leasing deals has become a key consideration in the work we do, so you can get the best leasing deals. Our process is built to ensure we accurately and efficiently identify your needs and requirements, achieve the best finance deal for you, apply for finance on your behalf and provide you with the quickest delivery possible.

Our First Class Service

At Commercial Vehicle Contracts, we ensure that every aspect of the car leasing process and van leasing process is seamlessly undertaken with full management on your behalf, meaning you can sit back and relax with the peace of mind that your chosen vehicle will arrive at your desired address matching your required needs.

All Our Latest Offers & News

Sign up to our mailing list for our latest vehicle leasing deals and special offers on a wide range of vans and cars straight to your inbox!

Selected vehicles Select a vehicle to appear here Select a vehicle to appear here Select a vehicle to appear here Select a vehicle to appear here
Pricing
Basic List Price
Monthly Rental
Engine and Drive Train
Transmission Type
Engine Size
Engine Configuration
Fuel Type
Fuel Delivery Type
Gears
Axles
Emissions
CO2
Euro Emissions Standard
Electric Range
Combined (WLTP)
Fuel Consumption
Combined (WLTP)
Combined (NEDC)
Performance
Maximum Speed
0 to 60 mph
0 to 62 mph
Power (BHP)
Power (PS)
Power (KW)
Torque
Dimensions and Weights
Length
Width
Height
Wheelbase
Ground Clearance
Boot Capacity
Fuel Tank Size
Gross Weight
Kerb Weight
Max Braked Towing Weight
Max Unbraked Towing Weight
General
Body Style
Doors
Seats
Insurance Group
RFL Rate
Front Brakes
Rear Brakes
Standard Front Tyre Size
Standard Rear Tyre Size
Standard Spare Tyre Size