There has been less fixed-ops traffic because of the COVID-19 pandemic and now a global microchip shortage threatens the supply of parts, putting a strain on some Canadian dealerships.
Tim Reuss, CEO of the Canadian Automobile Dealers Association, said that the longer the microchip shortage goes on, the more likely it could soon begin to hamper the availability of some electronic aftermarket and repair parts that contain microprocessors.
The impact at dealership service lanes has thus far been “sporadic” and limited to “individual cases,” Reuss said. It’s an indication that the chip crisis could soon move beyond limiting vehicle inventory.
The microchip shortage comes as dealers sort through the impact of the COVID-19 pandemic on their service bays. Since the pandemic’s start, Canadians have driven less on average than they typically have, particularly those who now work from home and no longer commute to the office. Fewer kilometres driven means fewer visits to the dealership.
As a result, fewer collisions mean less vehicle-repair work; and for many drivers, oil changes and maintenance have been less frequent.
“Pre-COVID, we were looking at 1.6 visits [per customer] per year at a dealership for service,” Michael Carmichael of the UpAuto dealership group in Stratford, Ont., said during the April 2 edition of Automotive News Canada’s weekly podcast.
“If that goes down to 0.6, you’re just increasing your opportunity for defection. ... We run the risk of losing a customer visit and having a different type of experience at a different franchise.”
The issue is “of great concern” to his dealership group, Carmichael said.
“We’re doing everything we can do to make sure we’re staying in touch, staying relevant and staying top of mind by providing information that’s of value to a driving consumer,” he said.
The microchip shortage has forced automakers globally to curb production of some of their vehicles. Suppliers, too, have had to cut back production, either because of a lack of microchips or because the assembly plants they supply are building fewer vehicles.
Production of nonelectronic aftermarket parts should be unaffected by the microchip shortage, even if a supplier’s factory also builds parts for an assembly plant that is shut down, said Sam Fiorani, vice-president of global vehicle forecasting at AutoForecast Solutions LLC.
“They typically have a parts line and an [automaker] line running at different speeds,” he said, “and they can keep up with demand for repair parts.”