How Are Global Supply Chain Issues Affecting Vehicle Finance?

Apr 28, 2022


Globally, lead times for orders of lift trucks and transport vehicles have grown following the COVID-19 pandemic. If a business finds that the delivery of an asset they have financed is delayed, what do they need to know? DLL explains.

The pandemic was certainly an unprecedented time in terms of supply chain disruption. However, there are often many other factors that can result in a delay in a vehicle being supplied. For instance, this may come from the end-user, who needs to push the delivery date back because they need more time to set up a new plant.

Flexible asset finance is key
In response to this, DLL is adept at providing flexible and reliable vehicle asset finance packages. How does DLL do this?

First, DLL credit decisions are typically valid for around three months. So, if a delay is just a couple of months, there is no impact on the finance package. If the delay exceeds the given period, it is possible to renew the finance offer quickly with DLL.

Renewing finance offers quickly
The process for creating the initial finance package with DLL is very thorough. This means that fewer details need to be checked to re-issue the agreement in the event of a delay. If the business has remained stable, and the asset has simply been delayed, often the same tailored vehicle finance package can be offered and finalized fast when the asset becomes available.

End-users can be reassured that ‘We’re with you all the way.’ Likewise, vendor partners know that they can offer the flexibility to their customers that will help them wait for, and ultimately finance, their order (rather than canceling it and trying to obtain equipment elsewhere).

Why have vehicle lead times grown more than ever?
During the pandemic, several factors disrupted the manufacturing and logistics related to vehicles, such as cars, trucks, forklifts, and other materials handling equipment.

1. Lockdowns and restrictions - Lockdowns caused some manufacturers to halt operations temporarily, and subsequent restrictions caused many plants to have to reduce the workforce on-site for safety reasons, resulting in reduced production capacity. In addition, access to labor was disrupted further due to staff illness or self-isolation.

2. Chip and component availability - One area heavily impacted by these factors was the production of chips – present in all manner of electronic devices and systems, including those central to many vehicles. Chip production lead times in China grew to an average of 15 weeks, longer in the case of some manufacturers. This halted or delayed many of the vehicles on the production line that needed them.

3. Delivery disruptions - Even those vehicles that could be produced were subject to further delays in delivery. Lockdowns, availability of staff, travel restrictions, delays at ports, and rising freight costs all resulted in significant reductions in container and air cargo volumes in 2020. Even as the world began to ‘open up’ again, many supply chains are still battling delivery bottlenecks and delays.

What all of this means to the end-user or equipment dealer is that the units they ordered some time ago, may not have arrived yet. Furthermore, new orders are subject to much longer lead times than before. For large fleets, the situation may be particularly disruptive. All of this raises the question of how to secure asset finance on a vehicle that may take months to be delivered.

A trusted partner for financing vehicles
DLL provides flexible finance packages that support businesses through the good times and those that are more uncertain. Solutions are available for financing multiple types of equipment and different brands, across all of a business’s global locations, such as materials handling equipment, transportation equipment, construction vehicles, waste management vehicles, port equipment and more.

Simplify the process and achieve efficiencies with DLL as a true finance partner.

Learn more about options for flexibly financing your equipment fleets with DLL.