Used Car Repairs Could Worsen Supply Chain Issues for Automakers
According to MEMA Aftermarket President and CEO Paul McCarthy, who heads a 500-member division that represents parts manufacturers for the auto industry, the current supply chain crisis is “the biggest…that we have faced since WWII…when our whole manufacturing economy shifted on a dime for wartime.” Just how dire this crisis is has been a large topic of discussion in national news cycles since the end of the COVID-19 pandemic, and it isn’t going away anytime soon. What hasn’t been discussed, however, is another facet of the current state of the industry that has the potential to cause the auto industry even more issues: the used car market.
Due to a variety of disruptions, the continued transition for electronic vehicles, and shortages of critical raw materials including steel, copper, and oil additives, automakers have consistently struggled for nearly two years to maintain critical electric inventory. This has had a grave effect on production outputs; Toyota, for example, according to data from AP, finished the year with just under 24,000 vehicles on their brand dealer lots nationwide. While that is an increase from about 19,000 at the end of 2021, it’s still short of the usual 300,000 on lots before the pandemic.
The production of used cars is hardly the only area of the auto industry that is seeing strain, however, much to the detriment of the consumer. With the demand for vehicles remaining near historic highs, many purchasers have been forced to the used car market — and those that already own vehicles that otherwise might consider a new vehicle have decided to keep the vehicle they have. Used vehicles, inevitably through the result of an accident or normal wear and tear, must be serviced. This has required used vehicle repair shops to flood the parts market on their customers’ behalf, adding them to a long list of market buyers who are in direct competition for the same parts and electronic materials, including consumer electronics manufacturers, healthcare manufacturers, and, of course, major automakers.
Some body shops have been forced to get creative when providing service to their customers. For example, example, according to a report from The Seattle Times, one shop manager said he has had to move away from relying solely on new parts and has turned to rebuilt and remanufactured parts at times to fix people’s vehicles faster. While effective, this approach comes with a wide variety of risks, including the health and safety of the customer, because such an approach requires the shop to move away from OEM repair procedures.
Indeed, especially as many automakers transition to offering mostly or exclusively hybrid or fully electric vehicles, the situation will only continue to worsen — at least until part production expands and diversifies away from the historical bottlenecks currently seen in Asia. The solution — the only solution — has to be the adoption of inventory acquisition strategies that prioritize supply chain resilience.
For more information on how a Partstat Inventory Ownership Solution can protect automotive manufacturers from supply chain disruptions, give one of our representatives a call today!