Chip shortage has affected my order

[Stevie900]

I've been advised that the alarm option at £240 is not available to order, the configurator no longer allows for it to be selected.

I believe at present that is the only issue apart from the ESA problems.

 

[stolzy]

Common all over. I was browsing the Mercedes configurator recently and there were several options ‘not currently available’

 

[ChasMill]

There are many manufacturers (clients of mine) that have unfinished stock piling up as they are waiting for micro processors. There was a fire at a factory in Japan, winter freeze in Texas, trade disputes with China and supplies being diverted to other customers. All in all, a perfect storm for the motor manufacturers in particular.

The loss to the insurance industry is going to be substantial (and as yet unquantified). The knock-on effects will be painful for all.

 

[HGS]

same.....bmw car ordered in May couple of options were removed in June due to chip shit as they were holding what stock they had for the higher up range models to ensure they could keep safety features
Got the car in July, BMW said chip situation was unlikely to be better before March 2022 quarter
Hit right across the car market on tech & saferty options. I was surprised to find out the number of chips in an average car
Apparently Hyundai saw it coming and bought in and stockpiled their requirements last year
The other story I heard was that the automotive industry slowed their demand for chips during the pandemic and that tech like Apple, Sony, Samsung etc increased their orders. With the 2 events mentioned by ChasMill, the production ground to a halt and restarting is taking time with the automotive request at the back of the queue

 

[Santa-2512]

My wife imports lots of electronic components from around the world

she was saying they haven't and any delivery's from Germany in the last 3 months

And were not talking esoteric chips and such, more basic stuff , heatsinks, switches etc

BMW have already reduced capacity at Mini because of it happening

 

[steadysteve]

There are many manufacturers (clients of mine) that have unfinished stock piling up as they are waiting for micro processors. There was a fire at a factory in Japan, winter freeze in Texas, trade disputes with China and supplies being diverted to other customers. All in all, a perfect storm for the motor manufacturers in particular.

The loss to the insurance industry is going to be substantial (and as yet unquantified). The knock-on effects will be painful for all.

How does it affect the insurance industry Chas?

 

[SBD]

I concur, lots of stuff, not just chips. Inductors, capacitors, plastics. Apparently 90% of the world's PVC comes from Texas where it doesn't snow, til this year...

I guess there will be big factories which cost a fortune and can't afford to sit idle, who have supply contracts with suppliers who currenty cannot meet their commitments. They will claim from the suppliers, and the suppliers will claim on their insurance.

 

[ChasMill]

How does it affect the insurance industry Chas?

Most commercial property insurance includes a limit for "contingent time element" or business interruption.

Therefore, if a business indirectly suffers a loss from an insured peril, (in this case a fire and winter freeze), the insured business can claim back some or all of the loss from the insurer(s), even if the loss does not directly damage any of their properties. If the loss affects one of their suppliers (either a named supplier in the underwriting submission, or even an unnamed / unknown supplier), the property policy can respond.

The example here being a shortage of chips has delayed the delivery of completed vehicles to customers, therefore incurring extra costs (extra expense) for storage and transportation of the vehicles off-site, or even the cancellation of orders. These costs can (and will) be passed on to insurers.

As a result, we are now seeing the limits for such cover being drastically reduced or, in the case of a major vehicle manufacturer I handle, removed completely going forward from renewal (for unknown suppliers). Insurers arguement is that if the customer cannot identify exactly who their suppliers are, there is no way that the risk can be correctly rated (priced) by the insurer.

A similar situation occurred aftere the floods in Taiwan a few years ago. BMW were unable to complete orders of several models of motorbike (K1600 being one) as the factory manufacturing chips for the bike was under water.

 

[steadysteve]

Most commercial property insurance includes a limit for "contingent time element" or business interruption.

Therefore, if a business indirectly suffers a loss from an insured peril, (in this case a fire and winter freeze), the insured business can claim back some or all of the loss from the insurer(s), even if the loss does not directly damage any of their properties. If the loss affects one of their suppliers (either a named supplier in the underwriting submission, or even an unnamed / unknown supplier), the property policy can respond.

The example here being a shortage of chips has delayed the delivery of completed vehicles to customers, therefore incurring extra costs (extra expense) for storage and transportation of the vehicles off-site, or even the cancellation of orders. These costs can (and will) be passed on to insurers.

As a result, we are now seeing the limits for such cover being drastically reduced or, in the case of a major vehicle manufacturer I handle, removed completely going forward from renewal (for unknown suppliers). Insurers arguement is that if the customer cannot identify exactly who their suppliers are, there is no way that the risk can be correctly rated (priced) by the insurer.

A similar situation occurred aftere the floods in Taiwan a few years ago. BMW were unable to complete orders of several models of motorbike (K1600 being one) as the factory manufacturing chips for the bike was under water.

Interesting insight. Thanks.

 

[Bubb]

I was worried when I saw the title as I was wondering what I was going to have with my fish.

Thankfully it’s only about computor type chips not real ones that you put salt and vinegar on (or gravy if you have no taste)

 

[stolzy]

I was worried when I saw the title as I was wondering what I was going to have with my fish.

Thankfully it’s only about computor type chips not real ones that you put salt and vinegar on (or gravy if you have no taste)

There's some northern monkey nonsense I can tolerate, but not that.

 

[Winjar]

some day you win, my samsung tv broke, extra insurance people say send to repair, I do this, they cannot get chip to repair, TV in recycling, and I get new TV, but the chip problem will get very bad, I feel sorry for many jobs will go away

 

[Wapping]

ChasMill, is correct vis-a-vis the chip shortage and the knock-on affect into insurance, we too are seeing claims come in under ‘Suppliers extensions’ and so-called ‘Non-damage’ and ‘Trade Disruption’ extensions / policies. The total global claim is unknown at the moment but it will run to many millions of dollars. It is though nothing new, as we saw similar claims (though not of the same magnitude) after the Thai floods and the Fukushima tsunami and its associated nuclear contamination problem. Also to, after the very large fire at the Kobi steel plant, which affected the global supply of specialist steels used in valve springs and some suspension units.

The odd thing about the insurance is that the claim rockets up but then can reduce. Here’s an example as to why. After the Fukashima tsunami, the arrival of my 1600 was delayed due first to a lack of electronics and then, separately, a shortage of tyres. Both shortages related entirely to the quake and / or the resultant nuclear problem. I - twice - had the right to cancel my order, due to the delay. For a while my (potentially) cancelled order would have sat on BMW’s books and formed part of a huge overall loss (claim) for the German automotive giant. In parallel, the Japanese component supplier might well have been showing a completely separate loss of profits claim - due to lost sales of components to BMW - in their books, too. In other words, one event (the tsunami) but two entirely separate claims, one in Germany and one in Japan. Now multiply that by the number of local and global companies affected. I didn’t cancel my order. As soon as BMW knew that I would wait, the ‘value’ of my single 1600 BMW would have been removed from the overall global potential total, reducing the huge total slightly. Multiply that by the number of people who also did not cancel their orders in the end and you can see how the overall total claim might well reduce. I had had the chance to cancel my order again, due to the tyre shortage. For a moment I’d have gone back onto the potential claim list, then dropped off it again, when I told BMW I’d wait some more. Eventually, someone will add up and best estimate what the total insured (and uninsured) claims were, but like cleaning up after the Lord Mayer’s show, that only happens when the last horse has passed. The final claims figure from the chip shortage will be huge, of that there is no doubt.

 

[Monsieur]

Why the chip shortage?
Is it raw materials, delivery issues?

One wonders if this will become more than a temporary blip and be a sign of things to come?

Maybe we’ll go back to cars that need WD40 spraying directly into the distributor cap each morning to start the engine.

 

[er-minio]

Interesting explanation of the insurance angle. Thanks both.

 

[Wapping]

Why the chip shortage?
Is it raw materials, delivery issues?

One wonders if this will become more than a temporary blip and be a sign of things to come?

Maybe we’ll go back to cars that need WD40 spraying directly into the distributor cap each morning to start the engine.

A fire at a major chip producer, ongoing trade disputes, a shortage of shipping containers, a significant change in demand (requiring ‘re-tooling’ in chip plants) as vehicle demand fell whilst home computer and smart phone demand rocketed, COVID staffing problems, the big freeze in Texas.