Executives at Australia’s biggest car companies say it is too early to determine what impact a recently-announced shortage of magnesium will have on new vehicle delays.
However, representatives for the Top 10 car brands in Australia said they are bracing for the worst – even though they are yet to be advised about any further stock shortages.
The car industry has been grappling with chronic delays in new vehicle deliveries during the pandemic due to a global shortage of semiconductors – which are crucial to the production of motor cars, computer equipment, and smartphones.
The semiconductor industry has struggled to keep up with demand after economies around the world bounced back faster than expected from COVID lockdowns.
The semiconductor industry has not been able to respond quickly enough because it takes 26 weeks (or half a year) to make one semiconductor from start to finish – and a new factory would cost in excess of $7 billion and take 18 months to build.
Every major car company has outlined delays of between three to six months for most popular models, with some waiting times – such as for the Toyota RAV4 Hybrid – stretched to 10 months.
The few exceptions are a small number of less popular vehicles that have weak demand.
Since reports of a magnesium shortage in Europe and China surfaced late last week, executives at Australia’s biggest car companies say they are yet to be advised about any delays specifically related to the new production crisis.
“As far as we’re concerned, semiconductors remain the biggest choke point in the supply chain for new cars,” said one senior car company executive who asked to remain anonymous.
Another executive, also speaking on condition of anonymity because the car company they work for is yet to announce its position or discuss the matter internally, said: “It’s too early to tell. But if the reports coming out of Europe and China are accurate, there’s a chance (the new-vehicle shortage and lengthy delivery delays) will continue well into the middle of (2022) or beyond.”
Late last week, European associations that represent the aluminium industry issued an “urgent call for action” against the “imminent risk of Europe-wide production shutdowns as a consequence of a critical shortage in the supply of magnesium from China.”
The peak aluminium industry body in Europe explained magnesium is “widely used in the metals-producing industry.”
“Without urgent action by the European Union, this issue, if not resolved, threatens thousands of businesses across Europe, their entire supply chains and the millions of jobs that rely on them,” the European aluminium association said.
“Due to the Chinese Government’s effort to curb domestic power consumption, supply of magnesium originating from China has either been halted or reduced drastically since September 2021, resulting in an international supply crisis of unprecedented magnitude.”
The European industry body said the European Union is “almost totally dependent on China (at 95 per cent) for its magnesium supply needs … with far-reaching ramifications on sectors such as automotive, construction and packaging.”
The post Magnesium shortage: How it will affect new-car delays in Australia appeared first on Drive.
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