Planning on buying a new motor? Chip shortages set to hit UK carmakers this year and next The global chip shortage is likely to have an impact throughout this year and into 2023, affecting some sectors worse than others, with UK car sales likely to be one of those hit. According to the Society of Motor Manufacturers and Traders (SMMT), the UK car market continued to be plagued by the impact of the COVID-19 pandemic …
give it a few years and they'll forget that.
In their drive to get the leanest possible company they forget you need a certain amount of "slack" in organisation to avoid being too fragile, but then that doesn't matter if you move on with nice bonuses before the brown stuff hits the fan.
I don't think it's a question of forgetting it, or even of fashion, precisely.
The problem is that while the supply chain is robust, you can have very tight supply arrangements, reduce your margins, push your prices down, and grab market share. That's the Walmart recipe. Eventually you drive competitors out in many of your markets, and you have a dominant position.
Whey the supply chain is broken, you're hosed, as we've seen all over the place for the past couple of years. But your competitors — what remains of them — are in the same boat.
So: during lean times, everyone suffers; during flush times, you grab market share and crush your competition.
And because the equity markets strongly reward short-term performance, it doesn't make business sense to plan for the long term. You'll be out-competed by the short-termers.
Basically it's a Prisoner's Dilemma, where the defectors gradually kill off the compiliers. Capitalism has evolved into a system with perverse incentives. Which is precisely what we should expect, because any sufficiently-complex system is always inevitably in a failure mode (see e.g. Braess's Paradox).
It is not a robust chain they need it is a beholden one and a reasonably steady demand. While the shutdown caused shortages, the problems they are seeing are a result of reducing their orders to their suppliers. The suppliers of key components weren't going to take the hit so started looking for other customers, now they want to ramp up their own production the key suppliers aren't just going switch back to supplying them as they have other orders on the book.
Just in time is not about reducing inventory - it is about pushing the risks onto the supplier and they are now dealing with the fallout when suppliers don't quietly take the hit
From what I've seen demand for new cars is definitely there as always, but many people are put off once they are told that either the delivery date cannot be defined or they get spun some bs about it being 3 months only for it to keep slipping or in some cases being told its 40+ weeks.
And thats fairly universal across all marques too - and nothing exotic either!!
Off the back of that, a lot of people are not ordering or cancelling orders and keeping their current car a bit longer.
We've all seen the mass media going on about a chip shortage - or "crisis" as everything seems to be called these days. Silicon chips are unobtainable, apparently. And industry leaders are blaming their inability to meet demand for products on the "chip shortage". But does this mean we should believe them?
Industry leaders are brilliant at blaming their mistakes on outside factors. Chips, and IT in general, is an obvious scapegoat.
It's important to differentiate between a "chip shortage" and demand outstripping supply for particular ICs. Cryptocurrency mining is soaking up GPUs like there's no tomorrow, so you could say there's a GPU supply crisis. The the boyz will have to make do with plain old HD murder simulators for a while.
The automotive sector always had an interesting supply chain. They beat the price down to the last penny and order "just enough" semiconductors meet their anticipated demand - if they guess wrong then it's on them.
And then there are the usual "flood/fire/zombie invasion" stories on silicon foundries that accompany every supply crisis. I'm not having it.
The facts (remember "facts" from the old days?) tell a different story when you look at the units shipped. Okay, this lumps in NVidia GPUs with 741 op-amps but it still paints a picture.
2019 976bn units shipped
2020 1002bn units shipped
2021 1135bn units shipped
So, if there's a semiconductor supply crisis, please tell me which semiconductors are actually out of stock?
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