UAE: New car deliveries face up to 6-month delay due to semiconductor shortage

New car deliveries have shifted to a slower gear with some models facing up to six-month delay in the UAE.

Car dealers in the UAE blamed semiconductors and supply chain issues for the delays in deliveries of new cars which is not just UAE-specific but a global challenge.

Vincent Wijnen, senior managing director of Al-Futtaim Automotive, said car dealers in the UAE are facing a shortage of supply.

“We have cars where we have stock and we have cars where you have to wait six months. It also depends on the grade as well because if you take a high grade you may have to wait longer than a base grade. So the delay is not generic,” he added.

He pointed out that delay is affecting luxury vehicles that come up with high specifications because they are equipped with more semiconductors.

Global semiconductor shortage has been crippling production for a year and a half and global consultancy McKinsey said in its latest report that not just automakers, but even manufacturers of laptops, whitegoods and other devices also cut production because of semiconductor shortage but the repercussions in the automotive industry have been more severe.

“Semiconductors are still an issue which constrains production. But that's not the only issue. What happened in Shanghai with a month of closure due to the pandemic had a lot more disruption because a lot of components come from China. Then logistics and shortage of containers and so on. There're a lot of elements that are playing,” said Wijnen.

Neil Lines, General Manager for Audi at Al Nabooda Automobiles, said inevitably, there have been many delays and obstacles in the production of new cars due to the global semiconductor shortage.

“Despite these difficulties, Audi Al Nabooda does have inventory in stock as a result of strategic planning and effective car flow management. Most of our line-up is available for immediate purchase from our showrooms,” he said.

Abhinav Gupta, CEO of Gulf Region at Cars24, told Khaleej Times that the UAE’s pre-owned car market is witnessing exponential growth due to the supply of new cars following the global shortage of semiconductors.

Industry executives noted that the delay is being faced by the Japanese, British and German auto manufacturers because the European cars are facing delays due to the Russia-Ukraine crisis because the raw material is sourced from the two countries.

Wijnen added that it's difficult to predict if supply is going to remain a challenge in the next year due to semiconductors and logistics issues.

Car sales recover

Vincent Wijnen added that the overall UAE vehicle sales are recovering, up by 8-9 per cent compared to last year. But compared to the pre-Covid period, the market is still down by five per cent.

“Passenger cars are still down by 12 per cent versus 2019 because a lot of businesses have started replenishing their trucks and businesses. Our market share is improving with regard to passenger cars. The number of people visiting our showrooms is up by four per cent versus H1 2019. We are more selling retail cars than we did in 2019 with the same number of visitors. That’s a lot to do with the acceleration of starting with the digital journey,” he said.

He added that most of the customers gather information digitally about the vehicles they intend to purchase before they visit the outlet.

“Most customers gather information at home on the screen, checking peer-to-peer information so when they come in, they're much better informed, so the deal closing ratio is much higher,” he added.

Wijnen added that car prices are on the rise due to the increase in material prices, logistics and currency fluctuations.

waheedabbas@khaleejtimes.com

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