As carmakers and dealers scramble to source vehicles, brokers and financiers are stepping in to provide frustrated consumers with purchasing and finance options.
It’s not unusual for the media to refer to situations as ‘unprecedented’. In fact, the word is so over-used that many newsrooms include it on their lists of banned terms.
But there’s really no other way to describe the current automobile shortage. It’s now affecting all corners of the globe, creating wait times of up to 12 months for new vehicles and driving up second-hand prices.
Jeep Australia boss Kevin Flynn told news.com.au: “I don’t think we’ve ever had such low levels of stock in this country.”
Toyota, Australia’s most popular car brand, says every vehicle in its range has been affected.
And Volkswagen has set up a dedicated website so exasperated consumers can search the company’s stock database and locate the few cars that are available.
“This shortage is worldwide, and it is affecting all makers,” says Kaine Ransom, director of Automotive Vehicle Brokers Australia.
“You can’t single out certain classes of vehicle – like hybrids – or even certain brands, because this problem is so widespread.”
But what, exactly, is causing it? As Ransom explains, it’s a confluence of factors. Or, to use another phrase favoured by journalists, a ‘perfect storm’.
“A semiconductor shortage is fuelling this significantly,” says Ransom.
Today’s cars each contain up to 100 semiconductors to help power everything from touchscreens to crash-avoidance technology.
“Oddly, there are very few manufacturers of semiconductors globally, and one of the factories recently burned to the ground,” he notes.
A shortage of magnesium, which is used in many of the aluminium alloys that carmakers rely on, is compounding the manufacturing problem. Ransom says power outages in China, which produces the bulk of the world’s magnesium, are to blame.
Staffing and distribution problems come into play, too. “The pandemic has been shutting down factories intermittently,” says Ransom. “That pushes back production but companies are continuing to accept orders, which has created these waitlists.”
The pandemic has crippled the global shipping industry, too. Specifically, a shortage of staff on the docks has slowed down the unloading of containers.
Australians hoping to buy a car in the coming months should gird themselves for a fight.
“You’re very likely going to have to ring around and around and around, and you won’t be getting a deal,” says Ransom.
“Unless you work with a broker, it’s going to take a lot of legwork.”
Ransom says his brokering business, which primarily works with doctors, is fielding an increasing number of calls.
“We all know that doctors are time-poor,” he says. “They just want a deal and to get it done. At a moment like this, with a shortage, brokers can save you a significant amount of time.”
Ransom’s key piece of advice, whether you use a broker or not, is to try be flexible if you’re not keen to order and wait.
“Australia hasn’t run out of cars yet,” he says. “If you’re happy to compromise and look at different models and finishes, it’s possible to pick up a car today.”
And, he notes, the recent slow-down in car sales has generated competition in the lending space, which means there are attractive financing options at present.
Even so, there’s an argument to be made for simply waiting six months or so to upgrade your car. After all, the current situation is a result of short-term disruptions, rather than systemic issues.
But Ransom reckons that’s a mistake. “We’re in such a mess that it’s going to take quite some time to clean everything up,” he says.
“If you wait six months, you may have fewer options, or you may end up joining the end of a waitlist that you could have jumped on earlier.”
He adds: “My business is speaking to multiple dealers and multiple brands, and the consensus right now is that this issue will go on for at least 18 months.”
Seizing the day
Finding a car right now could be tricky. But finding the right finance doesn’t have to be.
At Avant Financial Services, we compare finance options from our network of lenders who understand doctors’ needs and creates customised solutions for our clients.
We create plans tailored for business, personal or mixed use; devise repayment options to fit your cash-flow; and offer a range of finance types, from chattel mortgage to hire purchase, lease and novated lease.
Importantly, we move quickly. At a time like this, we understand that until you get your new vehicle home you won’t be able to relax. We’re here to help you seize the day.