Semiconductor shortage - Frequently Asked Questions

The current shortage of microchips can be explained by several factors. Firstly, the global pandemic and its associated lockdowns have severely slowed down the manufacturer's chip production. Secondly, sales of electronic devices such as tablets and telephones have experienced unprecedented demand. This situation was exacerbated by the fact that a massive winter storm in the US hit a number of electronics factories and restricted their capacity to produce microchips even more. Moreover, microchip production in Taiwan was disrupted by a severe drought, which showed how much water the semiconductor industry needs to produce its microchips. A major fire rage also raged at a plant in Japan that is responsible for one third of the world’s production of vehicle microcontroller chips. This contributed to the shortage we are currently facing.

Every new car uses micro controller units. They control various aspects of the vehicle, such as the chassis, safety system, ABS, stability control systems, airbags, automatic parking and other driving assistance systems. New cars may require up to 1,400 computer chips to operate all the various systems, ranging from electric windows to infotainment screens and active safety systems. So, yes, today’s vehicles are highly dependent on microchips.

Consumer electronics, such as consoles and tablets, sold faster than vehicles during the past lockdowns. Moreover, the automotive industry accounts for less than 1% of the global demand for microchips. Other industries are therefore more important in this market. That is the reason why microchip manufacturers have decided to prioritise these industries in today’s market.

We are currently unable to provide a conclusive answer to this. However, we have observed that some electric or plug-in hybrid cars are often delivered more quickly. Given that manufacturers have to comply with stringent European standards on the average CO2 emissions of models sold, it is not inconceivable that they are prioritising the production of electrified vehicles.

On average, we can see that delivery times have increased to more than 150 days (compared to 90 days in 2018).

All makes and models are affected to a certain extent, although not all manufacturers have adopted the same strategy. As a result, the impact can vary considerably.

This is not possible, because the situation changes every day. At the moment, the car manufacturers also cannot let us know in advance when they will be able to produce their vehicles, as they in turn depend on uncertain deliveries by subcontractors.

As each manufacturer’s production capacity may vary from one day to the next, it is not advisable to focus on a single solution. We therefore recommend that you consider all the options available on the market. Although the quantity or choice may be limited,  most makes still have models in stock or available for delivery soon. This can be a way to gain access to vehicles relatively quickly.

We are seeing a general rise in the likely delivery times. These delivery times are tracked as closely as possible in collaboration with our partners so as to be able give you the most recent correct information. However, we have noticed that our partners are often unaware of what to expect as well and are not always able to give us the correct information about possible delays.

Some vehicles may also be delivered to the dealer with equipment that is incomplete or missing. In that situation, a number of important guidelines must be followed:

• Vehicles that do not comply with the original order form must not be used without our joint agreement. If a dealer proposes to deliver a car that does not correspond fully with the order form, it is important that Arval is informed first so that the options can be discussed with you and your driver.
• If the dealer informs us that certain options will be missing from a vehicle, we will always discuss this with you. Depending on the situation (for example, it may be possible to install certain options later on), we shall look at the possibilities together and we can take the necessary steps to make contract adjustments, reject the vehicle or draft an agreement on the subsequent installation of the options.

Like many other industries, the leasing industry is impacted by the global shortage of semiconductors in the supply chain.

Under normal circumstances, we can make a vehicle available very quickly from our own fleet with a medium-term leasing package (1-24 months). Due to the exceptional shortage of vehicles on the market and very high demand for this package from our clients, the available supply is unfortunately limited at the moment and reservations may not always be guaranteed. We are doing our utmost to expand our capacity as soon as possible, but we are also facing the same delivery time delays for new vehicles. Thank you for your understanding.

Under normal circumstances, we can provide a replacement vehicle when your vehicle is repaired. The semiconductor issue is also having an impact on the delivery of cars used as replacement vehicles. To limit this impact as much as possible  in the future, we therefore advise you to plan a pre-assessment well before your vehicle is repaired where possible. During this pre-assessment, the repair company will check which items need to be replaced and place the necessary orders. You will then be informed when all the components have been received. This minimises your vehicle's downtime period and makes replacement vehicles available again more quickly.

Lease contracts may be extended if that is the best solution. We are also proactively monitoring the delivery times, but this is always based on the information provided by the manufacturers and importers.

In view of the situation, we recommend that you apply four principles so as to manage your fleet in these uncertain times: Anticipate, Extend, Electrify and Adapt.

1. Anticipate: Given the longer delivery times, we recommend that you order new cars six to nine months before the end of the current contracts.
2. Extend: Extending contracts is very useful because it gives you more time to plan and because it guarantees your drivers' mobility in the meantime.
3. Electrify: Given the importance of the CO2 emission standards imposed on manufacturers, electrified models are often produced more quickly than internal combustion engine models.
4. Adapt: Investigate alternatives that can ensure the continuity of your fleet. For example, your orders can focus on models that are currently still in stock or you can choose certain equipment that is available sooner than others types of equipment.

Arval can help you identify contracts that are up for renewal with a new order or that need to be extended. We recommend that you anticipate the renewal cycle at least six to nine months before the end of the contract. Solutions are available for every situation and our team is ready to support you.

The introduction of alternative modes of transport in business mobility started well before the pandemic and has accelerated in the past 18 months. These solutions are attracting more and more interest from employees, they have a positive impact on the environment and they are financially attractive to employers, so we suggest that you consider these initiatives and add them to your mobility mix. Arval is currently already offering solutions such as bicycle leasing and car sharing, and is working on adding other services. Do not hesitate to contact us for more information.