The pandemic kickstarted many supply chain issues — scarcity of needed products, labour loss, and increased logistics pricing are some of the effects. The year 2022, with restrictions easing, is supposed to be a breath of fresh air. But the Ukraine-Russia conflict erupted and supply chains were further disrupted.
Manufacturers, dealerships, and auto repair shops face the challenges this problem brings. This is far from over, at least according to 92 per cent of American consumers. And so, it’s interesting to dwell about the effects of 2022’s supply chain issue on auto repair, manufacturing, and car sales.
Car repairs are taking longer
Car repairs are taking longer. This doesn’t only speak bad to customers but also to auto repair shops, which might see a drop-in customer satisfaction and retention.
On average, it only takes two to five days to get a car fixed. But with the situation right now, customers need to get in line and who knows for how long.
A collision auto repair shop owner stated in an interview that a customer had to wait six weeks to get his bumper fixed, as supply was delayed.
Another owner in Morton Grove stated that acquiring parts is very challenging as vendors don’t have the part or the inventory is hit.
With car parts’ scarce, suppliers sell their items at more expensive rates. It’s estimated that the cost of spare parts will rise by five per cent by the end of 2022. This will demand customers to invest more for repairs. The problem is no one wants to pay a hefty sum for a car repair service that takes weeks or more to complete. And so, car repair businesses might get hurt if this supply chain issue on car parts won’t improve.
As what’s to come remains cloudy, auto repair shops might find insurance very helpful. Auto repair businesses can get cheap quality protection from some insurtech companies such as Next. Next recently announced it will provide auto service insurance aside from candle insurance, electrician insurance, and many other business products. See NEXT insurance reviews at Insuranks for further learning.
Auto manufacturing is a walking turtle
Supply chain issues affected the manufacturing of essential products, not only food or clothing, but also automobiles.
S&P announced in January that light vehicle production could decrease by up to 5.7 million units. Boston Consulting Group affirms and further states that the decline in automobile manufacturing will persist until 2024.
Car retailers are experiencing the effects. Inventories are at their lowest and can only supply one month of car sales. Looking into more specific figures, the shortage of inventory due to decreased manufacturing resulted in 14.482 million units sold in February, which is 6.6% lower than the previous month.
The root of this big problem is a small component that car engines and electronics need to function well — microchips.
Covid-19 first caused the microchip shortage in the global supply chain.
“The single biggest problem is a shortage of computer chips. The companies that make semiconductors just couldn't keep pace with how quickly demand for cars came back from pandemic lows. And there are a lot of computer chips in modern cars.” says Camila Domonoske, NPR.
And then came the Ukrainian-Russia crisis. Before the clash happened, the United States sourced 90 per cent of its neon from Ukraine. Neon is used for making microchips used in cars and consumer devices.
Now with Russia marching in the country’s borders, automobile companies have to deal with a shortage of microchips, which causes manufacturing to slow down.
But Intel, Micron, and Global Foundries — the leading microchip manufacturers in the United States — are not waiting for the final nail to be placed. Reports suggest that each is planning to look for alternative sources. Microchip shortage happened in 2014, and companies have already learned a lesson or two.
Tough to buy specific cars
Chips are low in numbers but the units in the assembly line are still many. The result? Automobile manufacturers had to put the production of some cars on hold. But still, most models are in the market but without some features.
Car dealerships are looking bare right now and customers find some models scarce. Examples are the Ford Mustang, Ford E-series, Ford F-650, Ford Superduty, Toyota Noah and Voxy minivans, and Mercedes C-Class sedans.
Ford announced the closure of its production plant in Flat Rock, Michigan in April. And before it made such a decision, Ford had ceased operations in its Ohio and Kentucky plants. Ford's plant in Michigan, manufactures the Mustang. The plant in Ohio — the Ford E-series, F-650, and Ford Super Duty. Lastly, Ford manufactures the Expedition and Navigator in Kentucky.
Last month, Toyota announced the temporary suspension of one of its factory lines assembling the Noah and Voxy minivans. The production of 14,000 units is affected by the decision.
Though set to return in the US by this year, Mercedes Class-C Sedans are still scarce. This is because the manufacturer has explicitly announced that it will stop selling some of its consumer grade cars for model year 2022 due to supply chain issues and other factors.
Suspension of production will affect the availability of some automobiles and won’t have a significant impact on consumers. Nonetheless, those who manage to buy their preferred vehicles must be prepared for some surprises.
Those who buy the 4-Series, 3-Series, X5, and X6 BMW 2021 and 2022 models will find their vehicle not having the usual touchscreen input in its central information display.
Chevrolet enthusiasts should be prepared to discover that the Chevy 2500 (model 2021 and 2022) doesn’t have an HD radio.
Car retailers and auto repair businesses face the challenges that 2022’s supply chain issue made. But customers will also feel the repercussions.
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