Bad news for new car buyers in South Africa

Many of South Africa’s popular car brands are experiencing stock level problems due to a global shortage of semiconductors and other supply chain disruptions.

Some modern vehicles now boast thousands of chips to monitor, manage, and control various functions.

The low availability of computer chips is due to the vehicle industry grossly underestimating a resurgence in demand for new cars following slumps in sales during the early months of the Covid-19 pandemic.

As car manufacturers placed fewer orders for semiconductors from chipmakers, foundries shifted focus to demands from other industries.

In South Africa, used car dealers like WeBuyCars have been cashing in on the lack of new cars, with their sales surging in the past half-year.

With the benefit of being readily available, some second-hand vehicles sell for more than their new counterparts, despite having more kilometres on the clock.

The WeBuyCars Dome showroom floor

One clear example of the impact of the chip shortage is the experience of a MyBroadband employee who wanted to buy the Toyota Corolla Cross hybrid.

The Toyota dealership told him that the waiting period on the compact crossover SUV is now between four and 12 months.

The car has proven incredibly popular since its launch in November 2021. Naamsa’s new vehicle sales report for March 2022 shows it outsold the Volkswagen Polo and the more affordable Polo Vivo.

But Toyota is unlikely to replicate this performance in the coming months, with devastating flooding at its Prospecton plant near Durban causing further disruption.

The plant assembles several of Toyota’s most popular models in South Africa, including the Cross.

The company has estimated it will be able to produce 45,000 fewer units as it returns the plant to operation.

Toyota Corolla Cross

Another MyBroadband staff member placed an order for the Cross hybrid at the beginning of February, long before the floods, and was told the waiting period was three months.

He has still not heard back from the dealer to apply for financing. The dealership told him this means his car has not yet been scheduled for assembly.

Further illustrating the impact of component shortages, the dealership told the customer in March that it had a 5,000-unit backlog on the Cross, with a 1,000-unit backlog on the hybrid batteries.

We asked South Africa’s top car brands how the global chip shortage had affected their local stock levels and if there were any signs of a recovery to normal operations soon.

Toyota, Hyundai, and Kia did not respond to requests for comment. Below is what the rest had to say.


Audi

Audi South Africa said it was not in a position to comment on the state of its local operations but shared its global statement on the shortage.

“Like many other manufacturers and other sectors of the industry, we are experiencing some supply chain issues and a few of our components are in short supply, in particular those relating to semiconductor chips, which have reduced our production capacity and restricted certain product specifications,” the automaker stated.

“This means that delivery times for some of our models are taking a little longer than we would normally expect. The worldwide semiconductor chip shortage is volatile and we expect that this is expected to continue within the coming months.”

“We are analysing the situation continuously and coordinating closely with our headquarters at Audi AG to respond flexibly to production stoppages, equipment restrictions and delayed orders. Our aim is to limit the impact on our customers as best that we can,” Audi added.


BMW

BMW said it was making individual adjustments to its production programme to consider the limited availability of semiconductor components.

“Our aim is to ensure supplies continue to reach our plants, although the bottleneck in the supply of semiconductor components may have an impact on the availability of individual vehicle equipment in certain models,” the company stated.

The manufacturer said it was working with dealers to offer customers alternative equipment variants if specific components are unavailable.

“This is discussed and agreed upon with the customers concerned on an individual basis,” BMW said.

BMW recently partnered with chip developer INOVA Semiconductors and manufacturer GlobalFoundries to ensure a guaranteed supply of microchips.

However, it still expects the supply of semiconductor components to remain limited for the foreseeable future.


Ford

Ford South Africa acknowledged that semiconductor constraints have continued to affect its manufacturing operations, with ongoing severity and impact on sales.

“We continue working closely with suppliers to address near-term production constraints, while Ford teams are working hard to maximise production, prioritising key vehicle lines our customers and dealers most want.”

Ford said it was also looking into establishing greater independence for delivering technologies and features its customers sought.


Jaguar-Land Rover

Jaguar-Land Rover said its semiconductor supply had continued to improve during the last quarter of 2021.

“The situation remains fluid and is expected to continue through 2022 but is expected to gradually improve as capacity within the supply base increases,” the company said.

“We are working closely with suppliers and directly with the chip manufacturers to secure supply longer-term and minimise the impact on customer orders wherever possible.”

It added demand for its cars remained strong.


Mercedes-Benz

Mercedes-Benz South Africa corporate affairs general manager, Thato Mntambo, said it was not currently possible to give a prognosis about when the supply bottleneck would be cleared.

Mntambo said the company remained in close contact with its direct suppliers to keep up with demand.

“Due to the high level of flexibility in our plants, we can react to such fluctuations in the best possible way,” Mntambo said.

She emphasised that the company was making its electric offensive with the Mercedes-EQ line a “top priority” amid the challenges.

Mntambo added that global demand for Mercedes-Benz vehicles remained strong despite geopolitical uncertainties and a volatile semiconductor market.


Volkswagen

Volkswagen said most of its models had been impacted by the chip shortage.

“VWSA is making every effort it can to improve the supply of vehicles for its customers,” it stated.

Polo Vivo


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Bad news for new car buyers in South Africa