The UK’s car industry post-pandemic recovery plans have been dealt a blow as a result of the ongoing global computer chip shortage.
UK production has fallen sharply since July, which was the worst performance that the month has seen in the industry since 1956 with just 53,438 cars being made – this is a drop of 37.6% compared to previous years.
100,000 Cars Lost
The Society of Motor Manufacturers and Traders (SMMT) expects the chip shortage to prevent 100,000 cars from being made in 2024, which would be an enormous blow to a sector that is still reeling from the pandemic and has made less than 1 million cars in the last year.
This is a great source of frustration as demand is high and the sector was showing signs of fast recovery once the economy opened up, but car manufacturers have not been able to raise their output as a result of the global chip shortage along with staff having to self-isolate due to the “pandemic” and shutdowns.
Chipageddon
Microchips (also called semiconductors) are a vital part of modern-day vehicles with most new cars featuring dozens of different microchips that are used in entertainment systems, electric car batteries, and controlling windscreen wipers.
“Chipageddon” as it is being called by those within the industry has arisen as a major global issue as a result of COVID-19, huge demand, and poor relationships between the US and China.
It is said that the shortage will get worse before it gets better and that it will be a year or two before supplies return to normal.
£14 Billion Lost Globally
It is predicted that up to £14 billion will be wiped off of car manufacturers’ profits globally in 2024 while the UK’s car exports fell by 37.4% in July. This is worrying for the industry and the economy as a whole, but the UK automotive industry is doing all that it can to keep production lines going.
The Impact on Used Cars
With production levels low and many motorists looking to keep spending down during COVID-19 and as a result of Brexit, shopping in the used car market makes a lot of sense. Those who buy a new or used car should consider GAP insurance to protect their investment in the event of a write-off and to avoid a difficult financial situation.
The global chip shortage has hit both the UK and global automotive industry hard and will test the resilience of the sector moving forward with industry figures calling on the Government to extend support.
