[ad_1]

Fleet managers should expect shortages of new company cars to continue through 2023 and beyond, consultancy firm Arthur D Little has warned, adding that even bigger disruption for semiconductor supply could still be ahead. 

Vehicle manufacturers have faced a challenging recovery following the Covid-19 pandemic, including lockdowns, social distancing and a combination of factory fires, extreme weather and the conflict in Ukraine affecting production of critical semiconductor ‘chips’ and wiring looms.

With restricted capacity, Wolf-Dieter Hoppe, a partner at Arthur D Little who focuses on the automotive sector, said vehicle manufacturers are prioritising the most profitable products (typically luxury models) and sales channels while also reducing discounts – something fleets have traditionally benefited from. 

In the UK, the British Vehicle Rental Association (BVRLA) recently reported “bulging” company car order banks with waiting times of at least 12 months for deliveries and signs that manufacturers are focusing on retail orders. SMMT data shows large fleets registered 137,946 fewer cars during the first seven months of this year than they did in the same period in 2021 – a 25.4% decline (to 404,457 units), versus a slight rise in retail volumes. 

Analysis by Arthur D Little shows margins on new vehicle sales had increased by up to 26% (for HyundaiKia) year on year, with higher transaction prices too.

Hoppe said: “We have seen the average price of vehicles has increased by more than 10% over the last year [and this] is a consistent trend across the brands [and] all segments. [Fleet managers] have to deal with two problems: one, getting the vehicles [they] need, and second the cost has gone up significantly.”

There is no short-term solution. Semiconductor fabrication plants take “up to three years” to build, the conflict in Ukraine is ongoing, and escalating tension between China and Taiwan is the “biggest risk” ahead, Hoppe said. Around 90% of the most advanced (five-nanometre or smaller) semiconductors are made in Taiwan. 

In turn, fleet managers must adapt quickly, he stressed, including extending contracts, standardising vehicle specification and adding new manufacturers and technologies – especially electric – to keep drivers moving. 

Hoppe also advised proactive maintenance to minimise fault-related downtime, and optimising remarketing strategies to capitalise on strong used values, noting that alternative mobility options could meet some employees’ travel needs.

[ad_2]

Source link

Load More By Michael Smith
Load More In Automotive
Comments are closed.

Check Also

Autocar magazine 1 February: on sale now

[ad_1] This week in Autocar, we put Porsche’s new 911 ‘SUV’ through its paces, break the s…