The microchip crisis that is affecting the ability of manufacturers to build cars the world over shows no sign of going away. It has been created by a perfect storm of events which, once understood, illustrates why there is no easy fix.
The first reason is the simplest: as cars become ever more complex, there is ever greater demand for microprocessors. If you drive a remotely modern car even its handbrake will likely have one. But the real problem is Covid. When demand for new cars fell through the floor early last year, factories were shut down and production slowed to a crawl, leaving chip manufacturers with what would have been an existential crisis. Except that just as demand for cars crashed, for the same reason demand for chip-hungry home entertainment systems went through the roof. And the chips used in that industry are more profitable than those used for automotive. So having been chucked overboard by the car industry the chipmakers are discovering that the lifeboat isn’t such a bad place to be after all. In fact it might be better and more lucrative than the ship. So there is little incentive to get back on board.
The ramifications of this are quite extensive: long waiting lists for new cars, and those cars that are built often being radically shorn of chip-heavy equipment from electronic dashboards and mobile telephone charging pads to some active safety equipment. But where most people will likely notice the change is not in the cars they’d like to buy, but those they already own. To give you two examples, the now 10-year-old Toyota Aygo I bought for my daughters to learn to drive is now worth at least what I paid for it five years ago. And the three-year-old Golf we use as a general purpose family retainer appears actually to have gained in value. I can’t sell either because I’d probably lose all I gained replacing them, but if you have almost any kind of second-hand car you’ve been thinking of shifting and not replacing, there has probably never been a better time than now.