Auto dealerships are having a hard time trying to assess demand and supply in their industry and hoping auto production and sales would return to normal, like back in 2019 before the pandemic.
Current market trends still show that there are several reasons why auto vehicle production may not be able to return to normal levels, at least in the short term.
Supply chain disruptions, labor shortages, semiconductor shortages, and climate change regulations are still distrupting the automotive industry.
These are quite a few challenges that are impacting the ability of auto manufacturers to return to normal production levels in the near term.
To address these challenges, car manufacturers may need to invest in new supply chains, production processes, and labor practices.
They may also need to work closely with governments, suppliers, and other stakeholders to address these challenges and find new solutions for producing vehicles efficiently and sustainably.
Supply chain disruptions, labor shortages, semiconductor shortages, and climate change regulations are still distrupting the automotive industry.
Automotive Industry Supply Chain Disruption
The COVID-19 pandemic during 2020-2022 disrupted global supply chains, including those that supply auto manufacturers with raw materials and components – in particular semiconductors and transportation of raw materials for process engineering. This has led to shortages of parts and materials, caused delays in production and slowing down the pace of manufacturing. The reduction in supply, caused increases in demand and hence prices.
Labor Shortages Across the Board, but Especially in the Car Industry
Many auto manufacturers are still facing labor shortages due to a combination of factors, including pandemic-related shutdowns (value chain in components and parts manufacturing as well as delay in transportation and increase in cost of transportation), worker illnesses, and difficulties in finding and retaining workers. This has dramatically slow down production and limit the ability of manufacturers to ramp up production to pre-pandemic levels.
Semiconductor Shortages
A global shortage of semiconductors has impacted many industries, including the automotive industry. These chips are used in a wide range of automotive components, from engine management systems to advanced driver assistance systems. The shortage has led to production slowdowns and shutdowns at many auto plants, limiting the ability of manufacturers to produce vehicles at normal levels.
Government Regulations
Many governments around the world are implementing regulations aimed at reducing greenhouse gas emissions from vehicles. These regulations may require auto manufacturers to produce more electric or hybrid vehicles, which can require different production processes and supply chains. This could further limit the ability of manufacturers to ramp up production of traditional gas-powered vehicles.
