‘Semiconductor chip resolution could see new car market improve in late 2022’

‘Semiconductor chip resolution could see new car market improve in late 2022’

Car dealers could see a surge in the second half of 2022 if difficulties with supplies of semiconductor chips are resolved, according to the Society of the Irish Motor Industry (SIMI).

Speaking to IF&CR, director general Brian Cooke says the new car retail sector has been hit with supply chain issues, including the global shortage of semiconductor chips.

New cars have been stockpiled in European car plants while waiting for chips to be installed.

Mr Cooke said the problem with semiconductor chips is one of a number of supply chain issues affecting the sector, but it’s one that could be resolved within months.

“There’s an issue in terms of supply chain due to Brexit issues, which has caused problems, particularly in relation to parts for servicing,” Mr Cooke said.

“We’re also seeing supply chain issues with vehicles including extra costs and duty charges as well, and I think that is going to be an online feature of trade between the EU and the UK.”

Every new car contains around 3,000 semiconductor chips and the global shortage has slowed down the production of cars, Mr Cooke said.

“Semiconductor chips are in everything from your laptop to your phone. But a lot of the factories closed during Covid and you’re now seeing a huge demand for them because production halted at the same time as you’re seeing an increased demand for new products, so it’s almost a perfect storm,” he said.

But with the semiconductor chip supply problems now starting to resolve, any car sales lost in the first half of 2022 could be made up later in the year.

“The situation has started to improve but it takes time to get back to normal levels. In the first half of 2022 there is going to be an issue with the supply of new cars and we hope that will resolve itself to some degree next year,” Mr Cooke said.

“We have two registration periods – January to June and July to December, so we hope that some of the sales we might lose because of supply issues in the first half of the year would resolve in the second half of the year.”

The supply chain issues came at a time of strong demand for new and used cars, with customers in the UK and Ireland ready to spend money that they’ve saved up.

“There’s a big increase in demand, not just for EVs but also petrol and diesel vehicles, and in the short term we are struggling to satisfy that demand for all types of vehicles,” Mr Cooke said.