The chips are down for the car industry (and everyone else)

‘The World is Running out of Chips.’

Talk about a terrifying headline. I went cold for a moment. Then I went straight onto my online shopping app and ordered several boxes. Salt and Vinegar, Fruit Chutney, Nachos, the lot.

Only then did I realise it was referring to computer chips. Phew. Still scary, but in a totally different way.

Jokes aside, it’s a real problem. We don’t always realise it, but nowadays you find chips in everything from mobile phones to washing machines to dog grooming machines. Usually, we don’t even give them a second thought. I don’t care what’s in the gadget: I just want it to work.

But right now, there just aren’t enough microchips in the world. There’s such a huge demand that manufacturers simply can’t keep up. And it’s causing huge headaches for a lot of people: games console manufacturers, smartphone makers, electronic goods companies. It’s even affecting the world’s supply of new cars.

Nowadays, modern cars have 50 or more microchips in them. No chips means no new cars. Carmakers like Volvo, Volkswagen and Toyota have already announced production cuts. That’s really bad news for the car industry, which was just starting to recover from an absolutely shocking 2020.

What this means is that if you’re in the market for a new car, you may have to wait a little longer for delivery. Or you’re going to find a lot less choice on the showroom floor. It’s also going to drive used car prices up even further.

But the ripple effects don’t stop there. As insurers, we’re going to start seeing the effects on our premium income. Fewer cars - and cheaper cars – being insured will definitely start affecting the industry’s revenues at a time when we were already lowering premiums for customers?who are driving a lot less .

Computer chips affecting the insurance industry? Who’d have thought. But hey, we live in crazy times. And I’ve always said that where there’s change, there’s opportunity. Right now, there’s change for days. Time to seize the day.

Oh, and please pass the chips …