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HOW UK CAR DELIVERY TIMES.... THEY ARE-A CHANGIN'

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posted by DESPITE STRAIGHT LINES (Paul Williams) alias DESPITE STRAIGHT LINES on Wednesday 1st of December 2021 10:01:20 PM

HOW UK CAR DELIVERY TIMES.... THEY ARE-A CHANGIN' AND HOW COVID-19 AND SHIPPING DELAYS FRUSTRATED US ALL We are seeing so many posts from prospective owners and those who have placed an order for the MG HS, asking why the long lead times. So, I have tried to piece together some of the key events which have resulted in the global delays for motor vehicle lead times. It's a long and very sad story, so grab a cuppa if you are going to read the whole piece, you are in for a bumpy ride (might need a chocolate Hobnob to go with that tea!) It was reported recently that British car production had fallen to its lowest levels since 1982, the days when 'Come on Eilean' by Dexy's Midnight Runners and 'Eye of the tiger' by Survivor ruled the UK charts and the Iron Lady Mrs Thatcher ruled the country and a sad day for British Leyland as they ceased production of the Austin Allegro! With Just 67,000 cars produced in September 2021, a fall of 41.5 per cent year on year, compounding the fact that only 498,923 units rolled off production lines in the first half of 2021. This is almost 40% down on the normal January to June five-year average, according to the SMMT (Society of Motor Manufacturers and Traders). We have all heard about semiconductor shortages all over the world, but: WHAT ON EARTH IS A SEMICONDUCTOR? Usually comprised of silicon crystals, a semiconductor (also known as a Chip or semi) is something which conducts electricity more than an insulator such as glass, but less than a pure conductor like aluminium. A semiconductor's conductivity can be changed by the introduction of an impurity, which is known as 'doping', to meet the requirements of the component for which it is a part. There are N and P type chips, but all we need to know is that they are used in almost everything electrical, and especially in cars. An average modern car might have between 1400 to 3000 chips, many more in Hybrids and full electric cars, I once read of 6,000 used for a Tesla and the cost of those chips has risen from being roughly 18% of the cost of a car in 2000 to 40% of it's cost in 2020. It's estimated that by 2030, that will rise to 45% of the total cost. That's mind blowing! CAUSES OF GLOBAL SHORTAGES AND THE SNOWBALL EFFECT Firstly the primary reason for the global crisis was the COVID-19 or Coronavirus pandemic which first began in Wuhan in China in December 2019. This caused a huge snowball effect in terms of consequences worldwide, one of which was a massive increase in remote work (also known as distance working and working from home) and remote learning which lead to a huge demand for computers, laptops, mobile phones and other consumer electronics all of which used computer chips. With entire working families confined to the home, and the wonder in the UK that was the Furlough Scheme, meaning that many people received full or near as damn it pay, and had nowhere to go and spend it, online sales of TV's and home appliances soared. With the first wave of worldwide lockdowns, computer chip manufacturers had to shut down completely, leading to depletion of current stocks, with no system in place to manufacture new ones. Between September to December 2020 there was more than a 26% growth in computer sales alone. The ongoing trade war between China and the USA raged on and in September 2020 the US Department of Commerce imposed tough new restrictions on China's largest manufacturer of computer chips, Semiconductor Manufacturing International Corporation - SMIC or 中芯国际集成电路制造有限公司 (中芯国际) making it almost impossible for them to trade with US companies. Based in Shanghai, the company had an annual revenue in 2022 of US$669.1 Million. Now US companies had to turn to Taiwan Semiconductor Manufacturing Company Limited (TSMC), NXP in Eindhoven in the Netherlands and Samsung for chips, but both were already producing at maximum capacity. The Japanese Asahi Kasei Corporation (旭化成株式会社) which is a leader in Analogue-to-digital converters (ADC) and Digital-to-analog converters (DAC), suffered a major fire in October 2020, causing further problems for the supply chain. CALL OF DUTY, MY A*SE! Now, with lockdowns all over the world, the demand for video game consoles soared which all contained many chips, and coincidentally at the same time as the global shortages, Microsoft announced the release of the Xbox Series X and Series S on November 10th 2020. At the same time, rivals Sony announced the release of the PlayStation 5 consoles, both systems heavily reliant upon chips from TSMC and AMD. Millions of chips had been diverted to these platforms, which ordinarily would have co-existed with those destined for the automobile world. In February 2021 a huge winter storm closed two Samsung factories in Austin Texas , and NXP in the Netherlands which set the supply chain back by months. Then on top of that in Taiwan there was a terrible drought in 2021, the worst for more than fifty years which led to a shortage of ultra pure water (technically water which has been purified to incredibly stringent specification). TSMC's factory for example uses more than 63,000 tons of water per day, and now with no monsoon season, production stumbled still further. There then followed another huge fire in March 2021 at Japanese factory Renesas Electronics, a company known for it's supply of more than 30% of the global uptake of Microcontrollers for cars. To compound problems, a third fire was reported by Germany based ASML HOLDING NV, seriously hampering the production of chip production. The Chinese government throughout the COVID-19 pandemic displayed a customary zero tolerance towards the infection spread, and this meant the closure of most factories and businesses with no exceptions. Chip manufacturing all but ceased with at best shortened working weeks and shortened daily working hours, or total closure for periods of time. So now what few chips were around, were being shared amongst the automotive industry, games industry and production of any and all electronic household items whereas once each had access to it's own portion of the supply chain. THAT LITTLE MATTER IN THE SUEZ CANAL The EVER GIVEN was a container ship built by Imabari Shipbuilding in Japan and owned by Shoei Kisen Kaisha, one of the largest container ships in the world at that point with a 220,940 GT tonnage and a length of 399.94 metres. On March 23rd 2021 whilst on route from Tanjung Pelepas in Malaysia to Rotterdam in the Netherlands, the ship battled incredibly strong winds only to run aground in the Suez Canal. She was later freed after six days and causing a huge backlog in ships needing to navigate through the canal, and the company were later fined $600 Million (the original fine imposed was $910 Million). The Suez Canal being one of the most important waterways in the world, connects the Mediterranean Sea to the Red Sea and part of the Silk Road connecting Europe to Asia. Once again the knock on effects of this catastrophe impact global shipping plans, and subsequently the cost of Metal containers for transportation on container ships more than tripled due to shortages which then had an impact on the supply of most of the worlds imports and exports. Factory prices in China for brand new containers have risen from approximately US$2000 for a 20ft container in January 2020 to $3800 for a 20ft container in March 2021.The average global price to ship a 40ft container more than quadrupled by July 2021, to $8,399 and the listed price to ship from China to major ports in Europe and the U.S. West Coast were closer to $12,000 a container with some companies being charged $20,000 for last-minute agreements to get goods onto outbound vessels. That has a massive knock on effect for companies and consumers alike. MAGNESIUM JOINS THE PARTY By September 2021 another crisis affecting the automotive industry loomed in China, concerning the manufacturing of Magnesium, a raw material which is key in the production of aluminium alloys for gearboxes, seat frames, fuel tank covers and steering columns within the automotive industry. China controls roughly an 87% hold in the global manufacture of magnesium and with the governments ruthless enforcement of energy control policies forcing magnesium manufacturers in Fugu and Shenmu counties of Yulin City in the Shaanxi province to reduce at best and suspend at worst all production, shortages were inevitable. Chinese magnesium prices rose instantly by 46% in September 2021 and averaged CN¥42,552/ton. The total combined revenue loss of the chip shortages is estimated at more than $500 Billion between 2020 and 2022. Global car sales are thought to have suffered an 11.3 million drop in 2021 and an estimated 7 million in 2022, following on to 2023 when it is hoped the situation will come more under control, with a projected loss of around 1.6 million cars produced. Some market experts do not expect the wholesale automotive market to return to pre-pandemic levels until 2025 at the earliest! Then there was the little matter of a huge reduction in passenger flights thanks to the pandemic and the need for quarantine to and from certain countries, and commercial flights carry cargo, often in huge amounts, leading to a massive reduction in parts and accessories normally shipped via this method. LEAD TIMES FOR VARIOUS MARQUES Pre Covid-19 the average lead time (delivery time) for a factory ordered car was 12 weeks or less, more for special orders and extensive options. I had a trawl around the net in late 2021 to see how other marques are affected, as obviously we only think about MG, quite natural when we have placed an order for one and can't wait until we can get our grubby little mitts on it! So here's a quick look at the current general lead times for some other car companies: (Roughly accurate as of November 2021) DIFFERENT MARQUE'S LEAD TIMES Audi 6-9 months E-Tron hardest hit. Have a dedicated customer page warning of problems. They are no longer building any new cars for stock. BMW 4-6 months all X-Series hardest hit Ford 4-6 months Hyundai 2-5 months Several only 2 months Mazda and Mini both around 4+ months but some mini models 10 months Mercedes A good history of high stock and so some models available in 2 months or so. Some AMG's E-Class and GLE's however are 10 months and some AMG models no longer available to order. Porsche 6-18 months with hundreds of orders simply cancelled according to some owner groups Volvo All models 6 months+ None available until March-April at the earliest Land rover Defender 2022 orders now closed, none till 2023. 9-12 months for some and Most P300's/P400/P525 and Carpathian's no longer available to order. Many models more than 12 months. A dedicated customer page online explaining the delays. Vauxhall Crossland auto , Grandland and ALL vans March 2022 at earliest. All other vehicles February earliest and dedicated customer page explaining delays. Volkswagen Some models 12 months like Tiguan and Toureg. Very limited stock Some models are now being down specced with less electronic gizmos and less chips, some are being sold with just one key to cut the chip numbers. Some Fords for example are sold in low spec and the owners will get free electronic upgrades when possible. Renault began suspending production at three sites in France and Romania, Opel suspended production in Germany and Spain, Skoda halted production at two sites in the Czech Republic and Ford halted production at its Cologne factory. Toyota paused production at it's Kolin plant in the Czech Republic. WHAT ABOUT THE MG HS? By September 2021 the lead time (delivery dates) in the UK had unofficially gained in length from the pre-Covid average of twelve weeks to sixteen weeks, to twenty weeks and gradually this began to increase. New stock dried up in the UK with some MG dealers not even having demonstrators left for customers to test drive. The second hand market naturally flourished and profited from the problem and Ebay for example began to fill with low mileage almost new HS's at highly inflated asking prices, way above book. At one point I saw a one and a half year old MG HS Excite on sale at a dealership for more than the cost of a brand new Exclusive DCT with the top spec paint. Bloomberg.Com reported on November 8th 2021 that SAIC Motor Corp was finalising a deal to purchase an additional two RORO (Roll on-Roll off) transport ships capable of holding 7,600 vehicles, a massive improvement over the current largest ships which can hold approximately 4,300 vehicles. These ships cost in excess of $76 Million each and are being acquired through SAIC's transport unit, Anji Logistics. Tenders were invited in August 2021 and Shanghai based Jiangnan Shipyard has added a contract for two new LNG (Liquified natural gas) fuelled Pure car/truck carriers (PCTC) relating to the order for $170 Million. These will be built and delivered in March and September 2024 or earlier. This bolsters SAIC's current fleet of around 25 ships and the deal was signed within in the next few weeks. Figures released show that vehicle exports in China had risen 86% to 220,000 units in October and 2.43 million units in the first 10 months of 2021, with SAIC the top exporter. These won't just be for shipping MG cars as SAIC has joint ventures with both Volkswagen AG and General Motors Co. in China, but it could certainly help us all and future customers. So there we have some of the reasons behind the global problems, the knock on effects and the huge impact upon the production of the MG HS, and it's journey times from China to UK shorelines. Things will slowly get better, but the speed at which normality will return is a source of interpretation and debate around the world. Written by Paul Williams on December 3rd 2021 and updated on January 25th 2022 ©All writing and all photographs (designated as taken by myself) on this site are copyright: ©DESPITE STRAIGHT LINES (Paul Williams) 2011 – 2022 & GETTY IMAGES ® No license is given nor granted in respect of the use of any copyrighted photographs or written material on this site other than with the express written agreement of ©DESPITE STRAIGHT LINES (Paul Williams). No Photographs taken by myself nor writing may be used as source material for other publications, websites or fan/owners pages or any other art form without permission and/or compensation to ©DESPITE STRAIGHT LINES (Paul Williams).



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