As background: Large-scale semiconductor chip manufacturers temporarily halted manufacturing to deal with the COVID-19 pandemic during 2020. This same course of action took place for automakers worldwide.

When working restrictions were lifted, chip manufacturers pivoted to deal with the surge in demand for consumer electronics. The US, in particular, took the lion’s share of laptops, mobile phones, gaming consoles to deal with work-from-home conditions and to ease quarantine-enforced ‘cabin fever’.

Eventually, automakers restarted vehicle production, but they were faced with delays in chip supply. These tiny components are made by a few specialist firms, typically based in the Far East, and are time intensive to produce. Carmakers were sent to the back of the queue for their share of semiconductor chips.

The lack of semiconductors used in a multitude of new vehicle systems has affected production in plants across the globe. The net result is that the supply of new cars has been stymied. This reduction in supply will affect new-car dealer’s stock. In the US, showrooms are emptying out as demand exceeds supply.

What does this mean for local automakers and importers? We reached out to vehicle manufacturers that produce new vehicles in South Africa to gauge how the shortage is affecting them and what we can expect going forward.

Audi

Audi SA representatives made the following statement: “Like many other manufacturers, we are experiencing some supply chain issues and a few of our components are in short supply, in particular those relating to semiconductor chips.

“This means that delivery times for some of our models are taking a little longer than we would normally expect. The worldwide semiconductor chip shortage is volatile, and we expect that this will continue in the coming months.

“We are analysing the situation continuously and coordinating closely with our headquarters at Audi AG to respond flexibly to production stoppages, equipment restrictions and delayed orders. Our aim is to limit the impact on our customers as best that we can.”

Mercedes-Benz

Mercedes-Benz SA says: “It is currently not possible to give a prognosis about when the supply bottleneck will be cleared. The situation is still volatile, and we are permanently re-evaluating what this means for Mercedes-Benz production.

“As a responsible and long-standing corporate citizen and major player in the South African economy, MBSA is exhausting all efforts to ensure that any changes as a result of the semiconductor shortage minimise impact on all key stakeholders.”

Toyota

Toyota’s spokesperson had the following to say: “Initially, all models retailed by Toyota South Africa were impacted by the global semiconductor constraint, however it is now the Hilux and Fortuner ranges that are impacted. While there is slight improvement, supply remains restricted, and it is unclear when this will be remedied. Taiwan and Japan are the main countries from where our semiconductors are sourced.

“Can we produce these locally? Not just yet. Actual semiconductor localisation is not on the cards at the present stage as this industry is already entrenched (highly specialised skills and equipment) in countries such as Korea, Taiwan, Japan and the US.

“Our focus in the mid- to long term is to localise simpler electronics such as sirens and ECUs. These electronic components will use semiconductors that will most likely be sourced from Taiwan or Japan. Advanced electronics such as Blind Spot Monitoring systems will only be studied once we have successfully localised simpler electronic components.

“In the interim, based on the shortage of parts, we have resorted to alternative modes of logistics in order to sustain production – ie air freight. It is a costly exercise but a necessary measure to keep our Toyota customers smiling.”

Volkswagen

“Similar to other automotive manufacturers, the Volkswagen Group is experiencing a global shortage of semiconductors that are needed by most of the automotive parts suppliers. As a result of the shortage, our manufacturing plant in Kariega is unable to continue manufacturing vehicles without disruption. Volkswagen is working intensely to ensure it has enough supply of products for its dealer network and other channels – rental and government to meet the customer demand.”

Summary

As the vaccine roll-out, locally and abroad, brings some form of normality to daily life, we find that COVID-19 continues to make its long-term effects felt. It is ‘Long Covid’, but not as the medical field describes it. New-car showrooms may start to look a tad sparser in the months ahead as OEMs struggle to meet supply requests. With new-car supply restricted, we could see a rise in second-hand values.