The ongoing semiconductor shortages, with the resultant delays on new vehicles, is impacting fleet replacement cycles.
As many as 1 million vehicles will be wiped from production inventories thanks to the squeeze on chip availability, says a report in the Financial Times.
As a result, many fleets are now facing lifecycle extensions as shortage of replacement vehicles becomes a pressing issue, which in turn places a premium on Service, Maintenance and Repair (SMR) schedules.
Philip Nothard, Chair of the Vehicle Remarketing Association, an organisation representing the interests of those involved in the used vehicle sector, says:
“Vehicle manufacturers are facing raw material shortages on multiple fronts with semiconductors, rubber and aluminium all trading at a premium. This will further dent new vehicle production cycles and restrict the volume of stock into the used market.”
Nothard, who is also Insight and Strategy Director at Cox Automotive, adds: “All of these factors are causing considerable challenges for the lease and contract hire sector, where a lack of available product prolongs de-fleet schedules.”
ATS Euromaster, a specialist tyre and service company, is expecting to handle more MOT testing as a greater number of vehicles remain on fleet beyond three years old, at which point a first MOT test is required. To date it says there has already been a 10% uplift in demand for its ATS Mastercare service, a fleet inspection that aims to keep vehicles moving by reducing the risk of vehicle tyre-related breakdowns.
Steph Millhouse, Head of Operations at ATS Euromaster, warns:
“Many fleets may find that they will need to keep vehicles on their fleets that are five years old or more, as they either extend finance contracts or keep purchased vehicles for longer than planned.”
FleetCheck, a fleet software specialist, says it is already advising fleets on preventative actions as vehicle replacement delays mount.
“The biggest impact of this is on maintenance. Fleets need to ensure that they have plans in place that will keep these vehicles operating in a safe and efficient manner,” advises Managing Director Peter Golding.
While extending for a further 12 months a three year old car that has spent much of the last year under-used as a result of the pandemic is much less critical, the case for light commercial vehicles is quite different.
“There are a lot of light commercial vehicles that have undergone heavy usage over the last year in everything from front line pandemic services to home shopping,” explains Golding. “Not being able to replace a van that is already six years old and perhaps already considered well past its prime by its operator is an issue.”
It all adds up to fleet operators needing to focus more closely on SMR schedules and inspection regimes to ensure vehicles are operationally fit for purpose while the semiconductor crisis stumbles on.