As ongoing effects of COVID-19 continue surfacing, OEMs are experiencing component shortages. Most significantly, semiconductors, or microchips, used for programming technology throughout a vehicle, are impacting vehicle production.
Due to stay-at-home mandates, the demand for consumer-electronics surged early in the pandemic, an industry that requires semiconductors 10 times more than the auto industry. Fast forward to fully reopened vehicle plants, OEMs that keep a “just in time” (JIT) inventory, or just enough for demand without having excess, are experiencing a shortage of the critical component as sales rebound.
While some OEMs can leverage strong supply chains and thoughtful planning, this surge is causing the price of semiconductors to rise and some production delays. In the case of General Motors (GM) U.S. fleet and upfit orders, we have experienced production cut-offs of specific model vehicles.
To help you plan a smooth model year transition during this time, we’ve compiled some helpful tips to consider.
Top three considerations for your fleet during microchip shortage
- Vehicle ordering strategy
We anticipate this impact to certain GM models may be followed by additional impacts to other OEMs and models. If you were planning to place new orders this spring, it is advisable to consider ordering sooner as we cannot guarantee the predictability of impacts of the industry-wide microchip shortage. By placing your orders in queue, it will enable us to follow up on and to mitigate against potential OEM delays.
- Vehicle selection strategy
Remain flexible with your vehicle alternatives and leverage Element Strategic Consulting experts as you compare your choices for model year 2021 vehicles. Read more about how Element can help make your vehicle selection process easier.
- Asset management
Efficient asset management can help you reduce costs associated with spare vehicles. Our recently released Idle Asset Management features in Xcelerate will help you leverage idle vehicles by putting them to use while you await new vehicles on order.