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Expat Relocation Challenge - Car Rental, Lease, and Purchase
There are chips in nearly everything electric you own, from your phone to your computer to your car. There are even chips in items you wouldn’t expect, such as your washing machine, electric toothbrush, and refrigerator. But these tiny parts that power so much of our lives are now in critically short supply.
The chips, often called semiconductors, sometimes called microchips, function as the brains of our electronics. They’re tiny technological marvels, hosting billions of transistors within them. These chips are the lifeblood of modern society, but even before the pandemic, demand for them exceeded supply.
The demand for electronics increased as people were confined to work or stay at home
As the world shut down because of the COVID-19 pandemic, many factories closed with it, making the supplies needed for chip manufacturing unavailable for months. Increased demand for consumer electronics caused shifts that rippled up the supply chain. The demand for electronics increased as people were confined to work or stay at home, such as laptop computers and especially entertaining devices. The need for these devices skyrocketed beyond what manufacturers could provide. As an example, try to buy a PlayStation 5.
But the issue wasn’t just with manufacturing. As COVID made its way through Asia, ports shut down, sometimes for months. Some 90 percent of the world’s electronics go through China’s Yantian port, and it was recently closed, leaving hundreds of container ships waiting to dock.
The chip shortage has also made renting, leasing, or purchasing a vehicle in the new destination difficult.
A major chip manufacturer says the shortage could stretch into 2024. A new vehicle can have up to 100 of these semiconductor chips on board; they’re used (and needed) in components from touchscreens to transmissions.
Almost every manufacturer has faced production delays and temporary shutdowns as they wait for the chips they need to finish building cars on the assembly line.
Now the wait time is between 18 to 24 weeks, and on some models up to 12 months wait time.
Some car models are subject to lengthy delays, and others are down-specced due to the shortage of semiconductor computer chips. When you ordered a new car from the factory in the past, you usually would expect it to take six or maybe even eight weeks to arrive at the dealership. Now the wait time is between 18 to 24 weeks, and on some models, up to 12 months wait time.
Chip shortage expected to cost auto industry $210 billion in revenue in 2021
Global production of cars is down by over 30% in 2021; The chip shortage is expected to cost the auto industry a staggering $210 billion in revenue in 2021. The shortage of new cars has increased demand for pre-owned vehicles, causing increased used car prices. In some cases, newer pre-owned models sell at the same or more than brand-new cars because consumers do not want to wait for a factory-ordered car. The chip shortage is expected to have costed the auto industry a staggering $210 billion in revenue in 2021.
For expats, this means that you cannot expect to get the exact car you want; you may have to compromise on the model, accessories, or even the brand you wanted, because the wait time for some makes is too long.
If you cannot afford to outright cash purchase a car, the best option in the short run is to long-term rent, which has the advantage of delivery within a few days, or lease/finance a pre-owned vehicle.
Be upfront and help manage the expat’s expectations in advance
At ExpatRide, we experience the frustration and lack of understanding from many expats, not getting the vehicle they dreamed of or that car their company promised them. So therefore, the best you, as an HR person, relocation management company consultant, or destination services consultant, can do is to be upfront and help manage the expat’s expectations in advance.
The rental car companies cannot replenish their fleets
The chip shortage affects the car sales and rental industries, as they cannot replenish their fleets after downsizing during the height of the pandemic. Therefore, rental car companies may not have certain vehicle classes available and may even require minimum rental periods of up to one week vs. their usual one-day rentals due to them not meeting the demand for rental cars.
Due to the shortage of rental cars, we at ExpatRide have partnered with more rental car companies to source from a broader supplier network to meet our clients’ demands closer. We are constantly researching, vetting, and onboarding new suppliers to ensure we can better support clients during the rest of 2022 and especially 2023 when we all expect the world to open up even more!
ExpatRide can assist in 175 countries with rental cars, chauffeur service, car leasing, and airport transfer.
Need assistance with car services for expats? Let ExpatRide lead the way
Contact us at CARS@ExpatRide.com for more information or visit www.ExpatRide.com
Want to learn more about the EcoRide program?
Contact CARS@ExpatRide.com or visit www.expatride.com/corporate
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