Why Aussies are having to wait months for a new car

If you've been shopping for a new car over the past year you'll know it has often been challenging even finding a vehicle in stock.

Lockdowns around the world and freight challenges spawning from the COVID-19 pandemic have thrown supply chains into chaos and pushed production lines to the limit.

It's been amplified by shortages of microchips, or semi-conductors.

How long are new-car waiting lists?

It means most brands have waiting lists of at least a few weeks, some much longer. Go searching for a Toyota RAV4 hybrid or the new LandCruiser 300-Series and you could be told delivery will take a year or more.

Volkswagen even took the unusual step to stop taking orders on its Tiguan due to a lack of supply.

It's an extraordinary position for a car industry that has long had the opposite issue: ample supply and in a lot of cases not enough buyers to keep the factories churning.

For decades many brands have effectively forced cars onto consumers, with stretch targets and discounts to clear the excess.

In 2021 and 2022 the situation has been largely reversed.

Sure, people are used to waiting for Ferraris and Rolls-Royces - it's part of the exclusivity - but not a Kia or Toyota.

Why are new cars in short supply?

The supply turmoil started early in 2020 when COVID began to take hold. Some manufacturing facilities were forced to shut due to government mandates or outbreaks of the virus. Others chose to bring in temporary production halts due to an anticipated collapse in vehicle demand as one of the biggest financial upheavals in modern history took hold.

Doom and gloom were front and centre and the car industry was in the bullseye.

Of course, as we all now know, the predictions of financial Armageddon were mostly avoided, largely due to unprecedented government support (which will have to be paid back in future).

Before long, house prices were surging and plenty were deciding a new car would look nice in the freshly minted driveway.

Why are cars affected by the semi-conductor shortage?

Once the industry began to ramp up production another problem took hold: a lack of semi-conductors, or computer chips.

An associated surge in demand for consumer electronics - everything from phones to game consoles - meant the world's chip manufacturers could not keep up with demand. It doesn't help that cars can have hundreds of microchips in each vehicle; they control everything from headlights, seat heaters and window switches to seat controls, instrument clusters and display screens.

Missing that single component left some production lines running at a lower capacity or stopping altogether. Brands such as Mercedes-Benz, Ford and Volkswagen took the unusual step of removing some features from their vehicles to reduce the number of microchips.

Others, such as Toyota and Mazda, decided against change the makeup of their models. For Mazda it helps Australia is the brand's most successful international market, so delays have typically only been a few weeks rather than the months experienced by many rivals.

In August last year Toyota announced it would shut 14 of its Japanese plants, some for up to a month. It added to already extensive delays on some models.

In recent months there's been an added layer to the vehicle delays: shipping. Costs have increased and as Mazda Australia managing director Vinesh Bhindi points out "it's no longer about price it's about getting space on ships".

Rising new-car prices have also seen used car values surge. With prices rising and discounts reduced it makes that near-new car a little more valuable. The unprecedented strength in used car values has flowed all the way to the cheapest, oldest cars.

When will supply improve?

But there is light at the end of the tunnel, according to Federal Chamber of Automotive Industries chief Tony Weber, who early in January predicted supply would start to better match demand.

"The blockages in the supply chain should start to unravel in 2022 ... and hopefully that should mean Australians don't have to wait so long for some of their vehicles," he said.

The unexpected outcome of the supply challenges is that it's taught car makers and dealers how to make more money selling fewer cars.

Speak to dealers and many say they've never been so profitable. There's no need to discount and finding customers has never been so easy.

Kia Australia COO Damien Meredith believes the "hard retail edge" of the car industry may wither as a result and that a new model of more considered supply levels will be "the new normal".

"You won't see historically what happens where manufacturers have thousands of cars on grass that are being cherrypicked by the dealers to go to market," said Meredith.

That doesn't necessarily mean a lack of competition and price inflexibility - far from it.

While brands such as Honda and Mercedes-Benz are now working on a fixed price model - you're no longer buying the car off a dealer but directly from head office - the addition of new brands and more electric models means value is as important as ever.

"I think there will be more entrants that will come in because of EVs from Asia," says Kia's Meredith.

Competition is already promising sharper pricing in future, especially with at least four new brands due here in 2022: BYD, Ora, Polestar and Cupra.

But the days of getting a few grand off the price and floor mats thrown into the deal may not be as fruitful as they once were.

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