Chipageddon is here: how will it affect South African truckers?
In a development that’s been dubbed “Chipageddon”, vehicle manufacturers around the world are now facing a dire shortage of semiconductors – also referred to as “computer chips”. How will this global disaster affect South African transport operators?
What is Chipageddon?
Most people are, by now, familiar with the shortages. Essentially, for a whole bunch of reasons – from increased consumer demand for electronic items during lockdown through to the US/Chinese trade war to a reduction in production (and more) – chips are in desperately short supply. While this has affected thousands of companies (you’ll be amazed to discover the extent of the use of chips now), automotive companies are facing massive production issues. Vehicles are, after all, computers on wheels and – sans those chips – they simply cannot function.
Industry decimated by crisis
Car producers have been hard hit by Chipageddon. Ford, Volkswagen and Jaguar Land Rover have shut down factories, retrenched staff and drastically lowered vehicle production. Naturally, truck companies are being impacted too. In March, Volvo announced that it was being forced to stop truck production thanks to Chipageddon. It said it would “implement stop days across its global truck manufacturing operations" in the second quarter.
Because this global crisis could affect every single truck purchaser, we have approached the various truck suppliers in South Africa in order to establish how they have been impacted. Over the next couple of weeks, we will give you the run-down on the status quo at each company. Luckily, it’s not all bad news!
DAF has stock
Take the situation at DAF, for instance. According to Mark Gavin, sales director for Transport Solutions at Babcock, the company has placed a number of orders with DAF this year for new vehicles. “So far, all deliveries have gone according to plan. DAF has continued to supply us with new vehicles in line with their commitments, which is great news for us considering we have recently launched a new product range in SA. We don’t currently have any product shortages in South Africa,” he reveals.
Is this positive situation likely to continue? Gavin says this is difficult to predict. “However, historical shortages or lead times were six months on average, which is the same as for made-to-order models. The duration will depend on supply chain catch-up and pressure from market demand. Things could stabilize in five to seven months,” he believes.
Rising new truck prices as a result of any product shortages are always possible. “Product shortages like this usually have long-reaching ramifications on many sectors of the industry and potentially could affect component pricing (and hence vehicle pricing) in the long run, due to supply and demand. Fortunately, though, the ZAR has recently strengthened against the Euro, which could possibly cancel out any potential price increases that may be required due to these shortages,” he says.
Demand patterns could change
Another spin-off of any product shortages could be a shift in demand. “The pre-owned vehicle market and the rental market always benefit from new vehicle shortages or sudden price increases from OEMs. We are well-positioned to adapt to this demand should the requirement be there. Babcock is in the business of ‘Transport Solutions’. We’re not merely focused on selling vehicles. We are able to offer a number of alternate solutions to assist our clients during any unusual times,” Gavin reassures customers.
Filip Van den Heede, MD of UD Trucks Southern Africa, has equally positive news for local transport operators. “UD Trucks is experiencing a limited impact. But this is managed on a case by case/area by area basis considering our global business and priorities,” he says.
No UD product shortages
Van den Heede says there are currently no UD product shortages in South Africa? “We are running in line with our planning, and we believe we can meet the demand for our product to achieve a fair market share,” he asserts.
He doesn’t believe that prices will necessarily rise as a result of Chipageddon. “Pricing is managed on many factors, so a single factor is not likely to have a greater or lesser impact at this stage,” he points out.
Like Gavin, he wishes to reassure customers that his company is also there for them. “We are endeavouring to be in constant communication with all our customers to ensure they have the best information available to make informed decisions, and our plans are on a good trajectory,” Van den Heede reports.
So, things appear quite rosy at DAF and UD – for now. We will provide Chipageddon-related feedback from two other truck makers next week.
