Auto Solutions still battling supply-chain issues
The Ukraine is more than 4,800 miles from Bermuda, but the war there is having a massive impact on local car dealerships.
Until February 2022, two Ukrainian firms provided half of the world’s supply of neon, a key ingredient in computer chip production. When the Russians invaded, those companies shut down.
“We are still struggling to get the microchip components and other accessories that build the car,” Glen Smith, of Auto Solutions in Pembroke, said.
But the chip shortage actually started during the pandemic. Chip manufacturers thought there would be a lowered demand, so they cut production.
Instead, just the opposite happened. There was an increased need, not just from car manufacturers, but also from factories that made other types of electronic goods such as computers and phones.
“The problem started at the end of 2021, and we were told that the problem would be resolved by the third quarter 2022,” Mr Smith said. “That problem has not cleared up at all in the last year. We are probably at status quo to what it was last year.”
And manufacturers are unable to say when the issue might be resolved.
Mr Smith said the Ukrainians also made a lot of car parts such as cables and harnesses that connect one part of the car to another.
“The result is that we are not getting cars as fast as we once did,” Mr Smith said. “It plays havoc. Before Covid-19 began you could have pretty much any colour or model of car that you wished. Now, if you look at our lot, it is empty.”
But he said on Monday the lot will be full again as several shipments on back order come in at the same time.
Auto Solutions sales and operations manager Harry Andrews said, at the height of the pandemic, people in the car manufacture world greatly under estimated how fast car sales would bounce back coming out of the health crisis.
“In the last six to eight months, all the manufacturers are really pressing us for a forecast for the next three years,” Mr Andrews said. “They are trying to get a feel for what we think the market will look like in three years.”
He thought that high demand for cars will continue, particularly for electric and hybrid vehicles.
But Mr Smith said Bermuda’s size restrictions on vehicles is hampering their efforts to feed the local appetite for electric vehicles. He said it is a matter of half an inch on either side, and a half an inch in the front and back of the vehicle.
He said car companies are making larger electric vehicles right now for the Asian, European and American markets.
“We have just had a lead on a smaller electric vehicle that would represent as a B-class car, but it is still a half an inch too wide to be on the road in Bermuda,” he said. “That extra width is caused by the addition of safety features such as side airbags for consumer protection.”
According to a recent report in Investors’ Chronicle, rates for shipping containers have fallen by as much as two thirds since the third quarter of 2022, after skyrocketing in 2021.
But Auto Solutions is not really feeling the impact of this trend. In fact, for some things, such as oil, they are still seeing the shipping costs going up, although not as fast as they did earlier in the pandemic.
“I think that might be due to rising fuel costs,” Auto Solutions parts manager Bill McNiven said.
Mr Andrews said they are also seeing manufacturers constantly increasing the cost of goods.
“But we are doing our very best to maintain pricing as much as we can,” he said.
“We are hoping we will get through these issues in 2023,” Mr Smith said.
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