The semiconductor shortage and its impact on the vehicle rental sector is now affecting the collection and delivery of new and used cars, bringing widespread challenges across the automotive sector.

The lack of rental vehicles has led to extremely limited availability of one-way rentals, which logistics firms rely heavily on when transporting vehicles

Vehicle movement and inspection firm DMN Logistics has warned that with new car sales slumping due to the chip crisis, carmakers are prioritising selling to dealerships rather than into the rental sector, leaving rental firms struggling to find new cars to replace older stock.

Not only has this resulted in a 40% rise in the cost of hiring a vehicle according to reports, but the lack of rental vehicles has also led to extremely limited availability of one-way rentals, which logistics firms like DMN Logistics rely heavily on when transporting vehicles.

Nick Chadaway, managing director at DMN Logistics, explained: “One-day hires, even on return-to-originating branch, are becoming harder to source which leads to longer lead times on new car delivery. We are also seeing many rental companies exit the one-way rental business altogether or increase their charge structure, typically by adding anything up to £50 per transaction on top of the daily rental pre-covid charge.

“As a result, we are having to find other ways to transport delivery drivers, like sourcing larger vehicles to carry more drivers and also support social distancing, or taking on longer-term hire cars, which is not very cost-effective or environmentally friendly.”

The business has warned that this is also leading to an increase in costs, which to date are being absorbed by delivery firms but at some point will have to be passed on to companies and retailers.

Chadaway said that customers in the logistics sector are seemingly accepting of the pressures currently within the sector and that the situation shows no signs of improvement in the immediate term.

However, recent reports suggest that the chip shortage is showing some signs of easing and that conditions should become better in the second half of 2022 – when collection and delivery demand is expected to rebound.

Chadaway added: “It’s vital that businesses focus on managing their vehicle collection and delivery service and continue to prepare services for a sudden demand once the chip shortage eases.”