Can UK carmakers weather the storm of a looming chip shortage?
October 24, 2025 by Siobhan Doyle
Car changing is a big deal
As a new global semiconductor shortage looms, British car manufacturers face a familiar challenge – but there are ways to stay ahead.
A new global chip crisis is brewing – and the UK car industry could soon find itself back in the firing line.
Tensions between the US, China, and Europe are rattling the semiconductor supply chain: trade restrictions, export bans, and government takeovers of chipmakers are causing parts shortages that ripple across the car industry. One recent example is Dutch chipmaker Nexperia, whose exports have been disrupted after a government takeover sparked retaliation from China.
Japanese manufacturers such as Nissan and Honda have also warned of “serious” semiconductor shortages, while in Germany, Volkswagen has already paused production of its popular Golf as chip supplies tighten.
It’s a worrying déjà vu for an industry still recovering from the 2021 chip shortage, which, amplified by the Covid pandemic’s impact on global supply chains, brought assembly lines to a halt and left buyers waiting months for new cars.
A spokesperson at the Society of Motor Manufacturers and Traders (SMMT), told Carwow: “Another semiconductor chip shortage is the last thing the global automotive industry needs. While the sector has made efforts to diversify its supply chains, if not resolved quickly this issue has the potential to severely disrupt vehicle production and market supply.
“SMMT is actively monitoring the situation and is in contact with members and government to understand the scale of any impact and measures that might be taken to mitigate it.”
Now, experts say British manufacturers need to move quickly – strengthening supply chains, improving forecasting, and investing in homegrown semiconductor capacity – to avoid history repeating itself. But how can they do it, and what does this mean for UK drivers?
Remember, you can buy a brand new or used car right here on Carwow. And you can sell your car, too. We’re here to help you through every step of your car-changing journey.
Why are semiconductor chips so important?
Microchips, or semiconductors, are the brains behind everything electronic in a modern car: from infotainment systems to safety sensors and electric drivetrains. They’re also used in many safety features such as anti-lock braking systems and in airbags. The average petrol car uses around 1,000 chips; for electric cars, it can be double that.
With the UK car industry focusing on electrification, the stakes are higher than ever. “A single missing chip can stop an entire production line,” says Professor David Bailey, automotive expert at the University of Birmingham. “You can’t just swap suppliers – every component has to be rigorously tested for safety and compatibility.”
“Any disruption to chip supply now affects the very core of the UK’s green transition,” Mike Hawes, chief executive at SMMT, added. “Without a resilient semiconductor strategy, we risk slowing down EV adoption and investment.”
What British car manufacturers can do next
While much of the semiconductor supply chain sits beyond the UK’s borders, carmakers here aren’t powerless. Here are several ways British brands can protect themselves, and their customers, from the next chip crunch:
1. Build stronger relationships with suppliers
Manufacturers can no longer afford to rely solely on “just-in-time” logistics, where parts arrive exactly when needed. By forging closer ties with chipmakers and maintaining modest reserves of critical components, UK brands can give themselves a small but crucial buffer.
2. Invest in smarter forecasting
Advances in data analytics can help predict demand spikes before they happen. “By using AI and real-time monitoring, car companies can spot supply risks early, and act before they cause production delays,” says Bailey.
3. Diversify sources
Relying on just one or two suppliers has proven risky. For example, smaller companies dependent on Jaguar Land Rover were severely affected when one of its third-party providers suffered a major cyber attack – a disruption unrelated to the chip shortage but shows just how fragile supply chains can be. To reduce vulnerability, UK manufacturers can work with multiple chip producers, including emerging European and Japanese suppliers, to spread the risk
4. Push for local production
The government’s £1bn semiconductor strategy is a start, but some experts say the UK needs to go further. Incentives for domestic chip assembly and testing plants could make supply chains more resilient, especially for electric car components.
5. Keep customers informed
Transparency goes a long way. Clear communication about delivery timelines, component shortages, and alternative models can help maintain customer trust, even during disruptions.
What is means for drivers
For now, you don’t need to panic. Volkswagen says its production remains “unaffected,” though short-term effects “cannot be ruled out.” But if the Nexperia crisis deepens, buyers could again see longer wait times for new models, particularly for electric cars which are most reliant on advanced chips.
There’s also the risk that another global shortage will leave UK manufacturers scrambling for supply. Companies such as Nissan in Sunderland and Stellantis in Ellesmere Port could face production delays, while suppliers – already operating on tight budgets – might need costly fixes or even temporary shutdowns. As a result, customers may experience longer waiting times for new cars.
In the longer term, the looming crisis could highlight areas where the UK car industry needs to become more resilient. Closer partnerships between manufacturers, suppliers, and government may help reduce the impact of future supply disruptions.
For UK drivers, this could mean shorter waiting times for new cars and a more dependable supply of vehicles in the years ahead.
Car change? Carwow!
Looking for a new set of wheels? With Carwow you can sell your car quickly and for a fair price – as well as find great offers on your next one. Whether you’re looking to buy a car brand new, are after something used or you want to explore car leasing options, Carwow is your one stop shop for new car deals.
Click here to follow us on WhatsApp, where you can keep up-to-date with all the latest news, reviews, advice guides and videos.