From chips to COVID-19: The automotive industry and the story of 2022 so far

Given the events of the past few years, no one expected 2022 to be smooth sailing – and the first two months of the year have certainly been tricky for the automotive sector. With rising COVID-19 cases, staff shortages in many sectors, higher-than-normal inflation and the ongoing semiconductor shortage, the industry faces an array of challenges.

At LeasePlan, we are monitoring the situation closely and advising our clients proactively on the best ways to minimise disruption. Here, we look at some of the main problems and explore some all-important solutions.

In 2021, the global chip crisis saw vehicle production drop by nearly 10.5 million units – and the disruption continues in 2022. By the end of February, lost automotive production is projected to exceed half a million units.

OEMs entered 2022 with order books at record highs, and some are already quoting vehicle production in 2023. But OEMs are not safe from inflationary price pressures – and they are also heavily exposed to rapidly rising shipping and transportation costs, not to mention the surge in raw material prices. As a result, new vehicle prices are expected to increase this year.

How to make more chips? Build more plants

Throughout 2021, semiconductor production facilities (or ‘fabs’) were operating at full capacity – and not only that, but they also sold a record number of semi-conductors: 1 trillion. However, competition for semiconductors is fierce across all industries, and demand continues to exceed supply around the world. This is a key challenge facing OEMs as they look to ramp up their supply chain.

But good news is on the horizon! Worldwide, nearly 40 new fabs are under (or about to begin) construction. We should start to see the impact of this huge investment – totalling around $150 billion – in 2023, with an improved supply of semiconductors. Advice for fleet managers

• Place orders as early as possible: 6–9 months before end-of-contract
• Accelerate fleet electrification: OEMs are prioritising the production of low- and zero-emission vehicles
• Assess what equipment you need when ordering a vehicle
• Consider adding more OEMs to the scope of your company car policy

Of course, the chip crisis sits against the wider backdrop of the ongoing pandemic. Two years in, vehicle sanitisation before and after servicing has become the norm, which is welcome news from a safety perspective. But with Omicron spreading more easily than other COVID-19 variants, garage capacity is clearly being affected. As staff isolate or quarantine, workshops become understaffed or even have to close, causing delays to vehicle repairs and maintenance. Planning ahead is therefore highly recommended – and remember that LeasePlan’s pick-up and delivery options are running as normal: a great option for anyone looking for contact-free services. Advice for drivers

• Plan services and maintenance far ahead of time to avoid any delays. With shortages of staff and parts alike, it may take longer than expected to get an appointment.
• Contact LeasePlan for everything related to service, maintenance, repairs or tyres. We’re in constant contact with garages and can help you book an appointment quickly, at a time that suits you.
• Use LeasePlan’s free additional driver services, such as pick-up and delivery or guaranteed slot availability, for a stress-free experience.

While order and delivery times for new vehicles have been impacted in most countries where LeasePlan operates, we’re working closely with OEMs and dealers to get vehicles to our clients as quickly as possible. Our employees are continuously monitoring local supply chains and economic circumstances, and our expert customer service teams remain available for all our drivers – so don’t hesitate to contact us for advice or information.

For more details about semiconductors and the chip shortage, including useful FAQs, check out our handy overview.