The car industry was one that suffered as a result of the covid-19 pandemic, with new registrations falling by 29% from 2019 to 2020. October 2021 saw the lowest number of new car registrations since 1991, showing that the issues are not quite over for the industry.
The semiconductor shortage is to blame for the downturn in new car registrations and is the reason why the automotive industry has not yet been able to bounce back to pre-pandemic levels.
What is a semiconductor?
A semiconductor is otherwise known as a computer chip or microchip. They are essential in any electrical device.
In regards to cars, semiconductors are responsible for the function of vital components in the vehicle such as safety sensors, brake systems, driver assistance technology, and infotainment systems.
Why is there a semiconductor shortage?
There are many reasons behind the chip shortage, but covid-19 can take some of the blame. Due to restrictions, production of chips slowed as factories closed or experienced staff shortages due to illness. At the same time, homeworking became the norm and demand for laptops and phones which contain computer chips increased. There were existing global supply chain issues, but the pandemic brought this issue into light and supply may still lag behind demand for some industries throughout 2022.
What does it mean for the car industry?
Because the semiconductor is an essential part of the vehicle, production has inevitably slowed for all car manufacturers.
This means that people buying new cars may have to wait longer than usual to receive it.