9:01 am, August 21, 2023
Cox Automotive says that car manufacturers need to ‘seriously’ invest in their supply chains if they are to remain profitable in the coming years.
The firm has published its latest AutoFocus quarterly insight report which takes in the opinions of some the automotive industry’s most respected experts.
The report found that money also needs to be poured into vehicle distribution and technological evolution if car brands are to survive.
It also called on them to ‘scale’ crucial elements of their businesses and work with other manufacturers in order to achieve the best results possible.
Writing in the report, Philip Nothard, Cox Automotive’s insight and strategy director, said: ‘We are seeing a new willingness on the part of OEMs to join forces to overcome the problems that have faced manufacturing in recent years.
‘Serious cooperation must be welcomed, especially given the mutual benefit inherent in such partnerships. However, more needs to be done to navigate the strongest headwinds faced by the industry for decades.
‘This indicates pressure on the supplier chain parts businesses from several areas, leading to unpredictability and constraints exacerbated by the lack of clarity over demand from the OEMs, who have suffered large swings in their production targets and volumes over the last few years.
‘There have also been bottlenecks to sourcing raw materials and labour shortages as employee expectations have shifted from manufacturing and production jobs to other roles or industries.’
Also commenting in the report was Owen Edwards, head of downstream automotive at accounting firm Grant Thornton.
He highlighted how the switch to electric vehicles is impacting on manufacturers’ profits.
He said: ‘The scaling up of the supply chain cannot be isolated to new drivetrain technology as traditional OEMs still aim to make profits from ICE vehicles and legacy parts.
‘ICE vehicles reduce their market share on a global basis, and producing such vehicles will inevitably become less profitable. Automotive manufacturing plants depend on volumes and high levels of throughput to make profits.
‘Some OEMs are reported not to be making sufficient profits from BEV sales and have continued to undertake increased investment in new battery and vehicle technology.
‘Therefore, with declining sales of ICE vehicles and insufficient profits from BEVs, OEMs are planning for the future, especially when considering the future of ICE vehicles.’
The full version of AutoFocus is now available to download.
