Supply of cars likely to become restricted due to chip shortage, dealership warns

The supply of cars for sale is likely to be restricted later this year as a result of the global shortage of semiconductor chips, a leading motor dealership has warned.

Pendragon, which trades under brands including Evans Halshaw and Stratstone, is the latest to highlight how the shortage could soon filter through to consumer-facing businesses.

It adds to similar warnings from rivals Inchcape and Vertu Motors.

Image: JLR temporarily suspended production earlier this year due to a shortage of parts

In a trading update – in which it highlighted strong sales in May and June – Pendragon said that “the extent of the impact of the well-publicised semi-conductor chip shortage is not yet clear”.

But the group added: “It is becoming increasingly apparent there is likely to be some restriction of supply during the second-half of FY21 [full-year 2021], with vehicle order times already being extended.”

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Pendragon also highlighted supply constraints and pent-up demand in the used car market.

Car makers across the world from Jaguar Land Rover to Ford have been grappling with a lack of supply of semiconductor chips for months, prompting temporary shutdowns and reduced output.

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Earlier this month, the UK’s Society for Motor Manufacturers and Traders (SMMT) said the shortage was hampering the industry’s recovery from the coronavirus crisis, with UK car production in May more than 50% lower than pre-pandemic levels in 2019.

Now, consumer-facing car businesses are starting to feel the pinch too.

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Last week, another car dealer, Vertu Motors, said a tightening of vehicle supply due to previously-flagged component shortages was “increasingly apparent”.

It added: “The expected time between order and delivery of new vehicles to customers for certain of the group’s franchises is now seeing elongation.”

Earlier this month, Inchcape highlighted uncertainty over “issues relating to supply due to shortages of semi-conductors”.

Another rival, Lookers, said in an update this week – without mentioning the chip shortage – that restricted supply of new and used vehicles had been “tightening in recent weeks”.