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15th July 2022

Global Factors Affecting Pricing and Supply in the UK Automotive & Leasing Industry

New Car Availability

A number of global events have had a significant impact on the availability and price of new cars in the UK automotive industry, regardless of where they are produced or how they’re going to be bought or leased.

Tusker have strong relationships with manufacturers giving us access to some cars that have a quicker than normal delivery time which are available to view on our ‘arriving soon’ page on our website after log in.

 

A Global Semiconductor Shortage

The industry were starting to see a shortage of semi- conductors before COVID-19 as with the rise of 5G came an increase in demand for semiconductors but manufacturing complexities also hampered production. Then, when the pandemic began, vehicle manufacturers took an almost universal decision to downgrade their contracts with semiconductor factories. Then, these factories were then subject to the enforced closures during lockdown which meant a pause on anything being manufactured.

Demand for new cars actually returned far more quickly than anyone had expected, and although the car makers were addressing the issue with suppliers, factories just weren’t able to increase their production quickly enough. Plus, due to stringent COVID 19 lockdowns in China, even today, there are numerous factory closures taking place for weeks at a time which continues to add to the production delays.

These shortages mean that manufacturers are still struggling to build enough cars quickly enough to meet the demand. Before the shortage, the average time for a new car to be delivered once ordered, was 3-4 months, the shortage has meant that current lead times are now an average of 7-8 months and some cars can have up to a 12 month lead time.

 

The Situation in Ukraine

The recent war in Ukraine has meant that the world’s largest producer of neon gas, which is crucial to the manufacturing of semi-conductors, has been diminished as the country has been brought to a standstill by the conflict. The Ukraine is also a major producer of wiring looms which in turn impacted manufacturers whose production has been compromised since the war began, while many manufacturers are now setting up production facilities outside of Ukraine, these will take months to establish.

 

Supply Chains

Added to this, is the breakdown in global shipping and supply chains. Demand for goods has increased since 2019, while shipping companies haven’t been able to fulfil deliveries due to a global container shortage, which has coincided with a lack of an available workforce at docks due to ongoing lockdowns.

 

New Entrants help with availability

With lower barriers to entry, there are going to be a lot of new manufacturers launching electric car only propositions in the UK which will have a faster delivery time. We’re already seeing new brands enter in 2022 and another 14 brands have signalled that they’ll be launching in the UK in the next few years.

 

How Tusker Are Supporting Drivers

Even in the midst of the global lack of new vehicles, Salary Sacrifice still remains by far the cheapest and low risk manner in which to access an electric car.

With no deposits and lifestyle protections in place, drivers can remain confident that should their circumstances change, they will not be penalised.

Despite the limited availability of new car stock, thanks to our close relationships with manufacturers, Tusker has been successful in gaining good access to cars with much shorter lead times which can be found on the ‘Arriving Soon’ page of the website when a driver browses to find a new car. The specification for these cars has already been made and the cars ordered and assigned a build slot which is why they are a quicker delivery than if a driver configure one through ‘browse cars’.

For drivers coming out of a car later this year, where there may not be a readily available replacement to hand, our teams can arrange up to a 12-month extension where needed to keep our drivers on the road, protect prices and give some time for global events to improve. Tusker’s customer service teams are now calling drivers with eight months left on their agreements, to start the process of ordering a new car earlier to offset delays in deliveries, or to arrange extensions to existing contracts if needed.

Thanks to ongoing conversations with manufacturers, Tusker is pleased to note that production levels are expected to improve during 2023, and as new manufacturers are due to enter the market, it’s expected that this will drive further competition to help to stabilise prices.

The dedicated team of industry experts at Tusker monitor all updates from manufactures and dealers on incoming delays to vehicles, slippages in lead times and these are relayed to drivers as a matter of course, to manage expectations and minimise disruption wherever possible.

So, while there is no easy or quick fix to the current market restrictions, Tusker remains positive that recovery will come, and that overall, the EV revolution which is underway, should not be unduly affected.

 

Further information

Interested in finding out more?