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5 Automotive Supply Chain Trends to Watch

May 30, 2023
Here are some of the top trends taking place in the automotive supply chain this year.

Responsible for designing, manufacturing and delivering vehicles to consumers, the automotive supply chain has been under a lot of pressure lately. Just as most industries began to see some relief from the global chip shortage, the auto industry—which needs anywhere from 1,500 to 3,000 semiconductor chips per vehicle—continues to struggle with shortages in this area.

The auto supply chain is also still working to catch up to the high demand for cars in 2021 and 2022 (many dealers lack inventory for certain makes and models) and tackle the transition to electric vehicles (EVs). Like many industries right now, the automotive sector is also grappling with a persistent labor shortage, rising business costs and high interest rates, among other challenges.

“One of the biggest gaps the automotive industry currently faces is a scarcity of skills,” Automotive World reports. “With the advent of megatrends such as electrification, the demand for tech talent has increased, while several roles have become redundant, including traditional engine assembly and service technicians.”

5 Key Trends to Watch

Here are five more automotive supply chain trends to watch right now:

  1. Lingering impacts from the 2020 shutdown. When the global pandemic hit, several manufacturing facilities shut down or experienced considerable disruption. “The automotive supply chain had production issues that halted operations completely,” Affinitiv reports. “OEMs shut down when major suppliers ran out of parts, abruptly stopping the whole automotive supply chain.” Those issues continue to impact the auto supply chain today.
  2. Despite the headwinds, the industry is in “rebound” mode. Newsweek says 2023 is shaping up as a rebound for the automotive industry, following a drop-off in sales in 2022. “Even as supply chain problems begin to ease, though, new challenges are emerging—a possible recession, still-high inflation and the impact of the war in Ukraine on the financial markets—that could give buyers pause about spending money on new and used models,” the publication adds.
  3. Innovation continues to go strong. The industry’s development of fresh products as design, testing, powertrain and sales evolutions that started pre-pandemic can be seen in many of the vehicles that now grace dealers’ lots, Newsweek says. In fact, Automotive News says that the industry as a whole is outpacing the rest of the economy when it comes to the degree of innovation, and that automakers and their supply chain partners have invested “hundreds of billions of dollars” in emerging technologies. Those innovations promise to transform how vehicles are made.
  4. Manufacturers are upgrading the customer shopping experience. Manufacturers like Acura have created virtual worlds where customers can engage with the brand. For example, Acura’s virtual showroom in Decentraland showcases its 2023 Integra model, giving customers a sneak peek at the car in a digital space, VISARTECH reports. “Virtual showrooms created with metaverse technology give customers a fun and interactive way to shop for cars. With virtual test drives and the ability to customize features, customers get a unique shopping experience that’s both enjoyable and convenient.”
  5. Everyone has an eye on future challenges. As the auto industry eyes the transition to a more electrified future, its supply chains will have to evolve and change. At the OEM level, Just Auto says vehicle makers are taking significant steps to prepare for much bigger powertrain battery needs. “Major investments in manufacturing capacity are being planned, sometimes strategically positioned with partners and sometimes kept in-house,” it adds. “The power relationships and problematic supply chain pinch-points of the future have yet to be determined, but they will be substantially formed over the next five years. [There’s] no time to waste.”

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