How the Microchip Shortage is Impacting Truck Fleets

The ongoing microchip shortage is continuing to cause significant delays in vehicle production. Not only is this making it harder for businesses to get the vehicles they need for their fleets, but the costs of vehicles, overall, have also risen greatly.

The Big Three automakers – Ford, GM, and Stellantis – have all recently announced temporary assembly plant closures due to ongoing issues that were borne from the 2020 pandemic. This has caused production delays of some of their top-selling assets, many of which are essential work vehicles, according to Newsweek. (https://www.newsweek.com/low-car-inventory-expected-2022-microchip-shortage-worsens-yet-again-1625540)

Truck Fleets are Suffering Now

This state of the auto industry has had a direct impact on fleets. According to the Wall Street Journal, service-based companies have recently struggled to find new work vehicles as business demand have increased amid a rebounding economy. (https://www.wsj.com/articles/chip-shortage-makes-work-trucks-scarce-for-businesses-facing-booming-demand-11626091201)

A bottleneck resulting from the high demand – and also the low supply of vehicles – has left small businesses and municipalities competing over the scarce supply of assets, according to the Wall Street Journal.

Indeed, earlier this year, the Pittsburgh Post Gazette reported that fleet sales were being sidelined by automakers amid the global microchip shortage in favor of feeding the pricier retail segment whose demand recovered more quickly than fleet. (https://www.post-gazette.com/business/tech-news/2021/04/23/chip-shortage-holds-up-rental-car-travelers-fleet-dealers-demand-surges/stories/202104230053)

Production Delay Struggles

Unfortunately, with these delays organizations who are looking to cycle out their older, higher-mileage vehicles may have to extend the current lifecycle of assets in their fleet portfolios.

And while it may make the most sense for fleets to figuratively “wait out the storm”, in terms of supply chain problems, fleets who hold onto their assets longer than their average replacement cycle recommends will run the risk of experiencing significant vehicle maintenance issues in the future.

This can lead to unpredictable intervals of vehicle downtime for fleets, possibly impacting business productivity, as well as adding an increased safety risk with drivers operating older vehicles. This could also negatively impact driver morale if the vehicles are not able to effectively support the business for which they operate, just to name a few potential problems that may arise from extending vehicle lifecycles.

Temporary Relief with Telematics

If fleets are experiencing hardships due to vehicle production delays, they’ll need to be much more considerate of the assets that are currently in their portfolios. Telematics technologies can help them accomplish this; to get a better understanding of the state of their vehicle fleet and help develop future business plans that relate to it.

For example, fleets can use telematics to track the routes of higher-mileage vehicles and identify where operational changes can be made, such as swapping which assets are used for certain business functions.

Also, using telematics can help fleets monitor for preventable bad driving practices – such as risky driving behaviors or excessive idling – and identify how these hinder proper vehicle maintenance strategies.

Growing Truck Demand and Increased Cost Problems for Fleets

Beyond the general issue of simply acquiring vehicles necessary to run a business, the current automotive production ecosystem has also made these vehicles much more expensive.

Growing business demands have also impacted the costs of fleet upfitting. Materials that are used for fleet-specific upfitting needs – including steel, for example – are in short supply.

Fleet managers should not be stagnant during this period and should rather be actively looking for solutions during this trying time for the overall industry. Since this microchip shortage has extended indefinitely, there remains uncertainty as to what vehicle availability will look like for the foreseeable future.

These current vehicle production issues are already expected to push the delays into 2022, according to some automakers. (https://www.reuters.com/business/autos-transportation/global-chip-shortage-will-easily-drag-into-2022-stellantis-ceo-2021-07-21/)

Alternative Solutions for Truck Fleets Needing Vehicles

Despite the current economic climate for vehicles, fleets don’t need to suffer alone as there are alternative strategies and different vendors that they can connect with to help them succeed during this difficult period. For example, fleets may want to consider their vehicle rental options if their organization is experiencing a boom in demand but is under-equipped to meet its needs, or their current fleet portfolio is unable to allocate assets to other parts of their business as necessary.

Fleets should also attempt to reach out to other industry suppliers and vendors to see if they can also help support them during this disconcerting era of the fleet industry. Communicating with people outside the organization, as well as other fleet professionals, will better help fleet managers navigate their business during this period of uncertainty and possibly gather new ideas for success.

If you’d like to learn more about how GPS Trackit can help to improve safety, increase productivity and reduce costs for your business, speak with one of our knowledgeable Fleet Advisors at 866-320-5810 or get a quick Custom Quote.