Local motor vehicle dealers are bracing for shortages as an inadequate supply of semiconductors –used in electronic devices— hurts the production of global automakers.
Toyota, Volkswagen and General Motors are among the automakers that are cutting their production amid a shortage of semiconductors that are key in the manufacture of modern cars.
“The semiconductor shortage is a global issue affecting every business and forcing many plants to close,” said Chris Ndala, the managing director of DT Dobie which holds the local franchise for Mercedes, Volkswagen and Hyundai.
“In the case of DT Dobie, we have had to look at our forecasts where the issue may affect some models and in others, we are well stocked like the Mercedes Benz trucks and buses among others.”
Mr Ndala added that the supply disruption is expected to continue until April 2022, with a major improvement likely to be felt in the second half of that year.
Semiconductors are used to control electrical current, making them essential in battery management and in-car entertainment, among other systems. They are found in devices such as sensors and microcomputers.
Their shortage has been caused by various factors including a faster-than-expected recovery in demand for vehicles and competition from other industries such as telecommunications.
Car shortages first hit the developed markets that have seen buyers pay more for the same models compared to last year, with the price increase spreading to used models.
The average cost of semiconductors per car is estimated at more than Sh50,000 and the figure is projected to rise in the short term.
It remains to be seen whether the supply disruption will dent sales in Kenya’s new-vehicle market which had staged a strong recovery in the seven months to July.
Sales in the review period stood at 7,439 units, representing a 34.4 per cent rise from the 5,532 units that the dealers such as Isuzu East Africa, DT Dobie and Simba Corporation sold in the same period last year.
The rise in orders was attributed to increased business activity from ease in restrictions aimed at fighting the Covid-19 pandemic.