Why the Chip Shortage and Resulting Vehicle Shortage are the Bermuda Triangle for Fleet Costs

If you haven’t already experienced it first hand, we have some bad news for you: Fleet managers are going to need a lot of patience in the near future. The new car delivery times are longer than ever – normally you wait up to 7 months for your car. For special models like the Audi e-tron GT, the wait can be up to 14 months. Some of the hybrids that are currently so popular won’t be available until spring … Spring 2023, mind you.

The company Dataforce confirms this trend: “With an overall market decline in new registrations of 25.1 percent, all sales channels suffered losses of over 20 percent in September 2021.” In the consulting firm’s view, this is not so much because there is no demand, but because companies are often unable to deliver: “The further development of the passenger car market depends primarily on the supply side. Demand remains high, but cannot be met. An easing of the supply situation for semiconductors is not foreseeable in the short term.”

In practice, this effect causes difficulties for fleet managers – fleet managers’ money now disappears into a Bermuda Triangle of fleet costs.

 

 

 

1st corner of the triangle: Vehicles are not delivered. Leasing contracts have to be extended – usually tacitly. This can be expensive.

2nd corner of the triangle: lessors are actually pleased with (tacit) contract extensions. Because: The car loses less value at the end of the term, but the same high instalment still has to be paid. But the first lessors are now demanding the cars back! Our guess: Selling the cars is probably more profitable than the already profitable tacit extension.

3rd corner of the triangle: If one and two happens, then you might think to yourself: let’s just take a rental car for the transition period. They sent me such great deals during the Corona period. It’s a different story now. Rental cars are also in short supply at the moment.

 

Good for those who now have a contract with flexible terms (did we actually mention that this is a matter of course with our FlexLease product?). In a flexible open-end lease, customers in the pandemic, for example, were able to easily exit leases by paying off the remaining debt and thus downsize the fleet. Conversely, now that vehicles are in short supply, lessees with an open-end lease can relax as they navigate the crisis and simply keep driving for as long as the business needs them. And don’t worry: With an open-end lease, no one would even think of reclaiming vehicles. After all, the useful life of the vehicle does not have to be finalised when the contract is signed.

Even before 2020, we said that flexibility is the new security. Now it is. But if you’ve been relying on old wisdom and so-called industry standards, you’re looking old. If you need help now, get in touch.

Flexibility in leasing contracts is important for you too? Read more about the differences between open-end leasing and closed-end leasing in this free e-book.

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