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Plant closure could be ‘tip of the iceberg’ for car supply issues, warns VRA

Last week’s temporary closure of Honda’s Swindon plant because of parts shortages could be the “tip of the iceberg” for new car supply issues in 2021, the Vehicle Remarketing Association (VRA) has warned.

Swindon currently produces 150,000 cars per year, and has around 3,500 employees

The VRA said there is potential for all kinds of lockdown disruptions across the world to affect car-making from all manufacturers

The problem, believed to be caused by poor availability of semiconductors and coming ahead of the summer 2021 permanent closure of the plant, is potentially a sign of things to come from all manufacturers, due to the impact of the pandemic compounded by other issues.

Newly appointed VRA chair Philip Nothard explained: “Car manufacturing is based on incredibly complex and geographically diverse supply chains all clicking perfectly into place at the right time. Any disruption to those processes can bring the production line grinding to a halt.”

He added: “While there is new car stock in the pipeline, there is a strong argument that we are only now really starting to see the impact of the coronavirus crisis on supply and it could be that we will see a range of other problems throughout the year.

“The positive effects of vaccination programmes globally will probably not be felt until the second half of the year and there is potential for all kinds of lockdown disruptions across the world to affect car-making.”

The VRA has already warned this month that Brexit could impact new car and van supplies – and Nothard said this was due to the bedding in of new import and export arrangements that were “being constructed almost on the fly”.

“We’re obviously very pleased to see some form of trade deal in place, it is much preferable to no deal, but the whole thing was very last minute and many of the practicalities are being sorted out in real time, which is not ideal. Everyone is aware of issues with queues at major ports and shortages of shipping containers.

“Again, this could have an impact on new car supply and again, the situation will probably only become apparent over the course of the year.”

And this could have a knock-on effect on the remarketing sector in years to come.

“This is unlikely to affect the used car market in the short term but it does certainly mean that there will be fewer vehicles available in the future,” said Nothard. “On top of vastly reduced new car sales in 2020, another quiet year in 2021 would mean a dramatic fall in availability within the used sector in the future.

“Normally, this will lead to a rise in values and general difficulties with traders and consumers getting hold of the vehicles they want at the prices they are willing to pay. Market disruption of this kind is very undesirable.”

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Natalie Middleton

Natalie has worked as a fleet journalist for 16 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day. As Business Editor, Natalie ensures the group websites and newsletters are updated with the latest news.