Car makers face losing nearly £80bn in revenue as warning semiconductor crisis could last two years

  • Researchers say £78bn will be swiped from car makers as a result of parts shortages
  • No short term fix to semiconductor crisis, says IBM
  • New car supply issues set to hit car dealers in second half of the year
  • New car shortages likely to push used car prices up further

Time 8 months ago

Car manufacturers face losing nearly £80bn in revenue this year as the shortage of semiconductors continues to cause serious production issues – and the crisis could last two years.

New figures from researchers Alix Partners show 3.9m fewer cars will be built across the world as a direct result of the shortage in 2021.

It says car makers will lose $110bn (£78bn) as a result.

The latest issue of Car Dealer Magazine is out now!

Car makers have already slowed down or halted production lines across the world due to the chip shortage and supply to the UK market is expected to get worse as the year goes on.

Modern cars use more than 1,400 chips each to control a huge manner of a car’s functions making the shortage a ‘critical issue for the industry’, says Alix Partners.

Jim Whitehurst, from IBM, told the BBC that the chip shortage could be here for some time yet.

He said: ‘There’s just a big lag between when a technology is developed and when a fabricated plant goes into construction and when chips come out. 

‘So we are looking at a couple of years before we get enough capacity online to alleviate all aspects of the shortage.’

The largest hit to production is expected in the second quarter which in turn will impact deliveries in the second half of the year.

This will deal a blow to car dealers who are enjoying bumper business as customers flock back to showrooms with lockdown savings to spend.

There are already reports that consumers are turning to the used market instead because they cannot get hold of the new cars they want. 

Some car manufacturers are quoting drastically long lead times for new cars and vans because of the chip shortage.

Car Dealer was told this week that Renault Trafic models are being quoted for delivery next March due to the parts shortages.

Jim Holder, editorial director of What Car? told Car Dealer earlier this week that buyers are flipping their purchases into the used market.

He said: ‘We are hearing about the nearly new market hotting up. 

Get more from Car Dealer

  • Premium stories
  • Used car data
  • Magazine early access

‘Our weekly polling of car buyers tells us that demand is strong, and that buyers who can’t get the car they want are willing to either buy nearly new or swap to models or brands with availability at increasingly high rates.’

Other valuation experts told us that the shortage could push used car prices up even further. It is likely to exacerbate the supply shortage of used cars even further as the year goes on, servicing to shock the market further.

Used car prices are rising at their sharpest rate for years with some models – like the VW Golf R jumping 35 per cent in just six months.

James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

More stories...

Server 190