Irish car buyers have, in the past few months, become used to exercising patience. The global shortage of microchips might be easing somewhat, but its ramifications will rumble on for quite some time yet, and it continues to affect the production and delivery of new cars.
That effect can be mild, in that it may mean waiting a few weeks for delivery of a new car. It can be more stringent, meaning a wait of three or even six months. Or, in the worst cases, it can mean that an order taken might actually be cancelled outright.
This is precisely what befell Adrian Ryan, from Cork. Ryan had ordered his new car last October, and even though one might expect at least a little good karma from ordering a new electric car, as opposed to a more polluting petrol or diesel model, that was sadly lacking in this case.
"I'm based in Cork, and we were trading out of a Skoda Kodiaq. We started shopping around back in September 2021, and we said we'd go electric, now that the range is starting to come up to the sorts of levels you can really use. Once we started seeing ranges of 400km and up, we thought that looked okay. We looked at three cars – the Skoda Enyaq, the Volkswagen ID.4, and the Audi Q4 e-Tron. We tried for the Enyaq first, but were told that we wouldn't get the car until July, so that was a thanks but no thanks. We tried the ID.4 but once we'd test driven the Audi, we decided that that was the car for us."
So, a shiny new Q4 was ordered, and Ryan was given a prospective delivery date of February. Which means that he should have had the car now. Which he doesn’t.
“In December, we were told that it was likely to going to slip to July,” Ryan told The Irish Times. “At that point the dealer, Audi Cork, was getting nervous because they still didn’t have a confirmed build date for the car. And then, just last week, I was called and told that not only was July off but that I wasn’t going to get a car at all in 2022. Audi Cork told me that their order allocation for 2022 had been decimated.”
That was it. No car. Order cancelled, and no attempt made to divert Ryan's business into another Audi model. There was, briefly, the potential for a Volkswagen ID.4, but again the lack of firm dates put him off. It's notable, of course, that the ID.4, Q4, and the Enyaq are all built in the same factory – VW's vast all-electric car plant in Zwickau, Germany.
That same factory is clearly under the cosh, somewhat, as far as building cars is concerned at the moment. It is currently idled due to parts shortages.
Volkswagen has just announced that its ID.3 electric hatchback – also built in Zwickau – is being restricted to a single trim and equipment offering in some markets, as a way of streamlining production and easing the demand for microchips that simply aren’t there.
"Due to very high demand for the all-electric Volkswagen ID.3, combined with the still-volatile semiconductor supply situation, delivery times for this popular model are currently much longer than usual. Therefore, in order to minimise the waiting period for a new car, Volkswagen has temporarily simplified the ID.3 model range in some markets," said a VW spokesperson.
Which is not much help to Ryan, nor anyone else who’s had an order delayed or cancelled outright.
Audi Ireland, responding to a query from The Irish Times about cancelled orders, said: "As you know, a significant shortage of semiconductor capacities is causing global supply issues for production in many industries, including entertainment electronics, computers, telecommunications, automotive industry, etc. Regrettably our production process has also been impacted which has caused, in some instances, the unforeseen cancellation of customer orders.
“We are very sorry to hear the customer is considering purchasing another brand. I can’t comment on the availability of other brands’ products, but we are constantly working with our manufacturer to secure as much production as possible for our customers in Ireland. Our dealers are working closely to find solutions with customers who are affected.”
According to Ryan, though, the dealership did not offer to help find solutions. “To be fair, I get it – I’m one customer, and while I’m not very happy, that dealership is now having to make that same phone call to 25 other people, and that’s going to have a huge impact on their business, so I’m sympathetic. I work in the area of supply chain myself, but even so it’s stunning to me that you can actually take an order, and then three or four months later cancel it because the chips aren’t there to build the car.”
Ryan has since found a car, and one that can be delivered. "Long story short, we actually ordered a Hyundai Ioniq 5 yesterday. I'll have it by mid-April, and actually if I'd been a bit more flexible on colours and spec from my side of things, I could have had one from stock. Mind you, I'll wait until I have a chassis number, when I know it's actually being built."
Looking at the top of the Irish new car sales lists, it's pretty clear which car makers did their sums and got popular models ordered and delivered in January. Toyota and Hyundai sit in first and second places in the best-selling brands list, and are the only car brands to have increased sales compared to this time last year. Indeed, between them, they are actually taking more than a third of all new car sales in Ireland right now.
"We ordered stock extremely early, last April for many models, and in large numbers, so we have more stock available as a result than some manufacturers. Equally we tweaked our specifications for what could be produced early," said Stephen Gleeson, managing director of Hyundai in Ireland. "The reason we have stock is because we stuck our neck out early and ordered cars."
However, even brands that are doing well now know that the supply winds can change in an instant. Steve Tormey, managing director of Toyota in Ireland, told The Irish Times: "Demand is extremely high right now and the supply situation is very fluid."
However, even brands that are doing well now know that the supply winds can change in an instant. Steve Tormey, managing director of Toyota in Ireland, said “Demand is extremely high right now and the supply situation is very fluid.”
We wouldn’t expect any easing in the supply crisis any time soon. While the chip supply issue should start to ease as we got through 2022, the Russian war against Ukraine is affecting vehicle and component supply and production in both countries.
VW has idled its Zwickau factory - the very factory in which the Audi Q4 is built - along with its vast Dresden plant.
The irony is that the car industry is being hurt by the very just-in-time manufacturing processes that it helped to introduce.
Just-in-time, the process of making things to go straight onto shelves, or into the hands of customers with little or no time spent in stock warehouses, was developed largely by Toyota in the 1950s, after its then-chairman Eiji Toyoda had seen the appalling waste inherent in the production methods of the big American carmakers. The efficiencies brought about by just-in-time propelled Toyota from a small regional car maker to the biggest and wealthiest car manufacturer on the planet.
Does this crisis mean the end of just-in-time manufacturing? Probably not, says Sean Ashcroft of Supply Chain magazine. "Companies will 'reshore' production, so that their just-in-time models are less prone to a right royal buffeting from supply headwinds. And then there's digitalisation, which – properly implemented – makes supply chains far more agile and better able to withstand serious and protracted disruption, both the just-in-time supply model and the traditional one. So no. Just-in-time is not terminal. It's simply undergoing procedural surgery" said Ashcroft.
