The pandemic has triggered many supply chain issues – scarcity of needed products, loss of manpower and increased logistics prices are some of the effects. The year 2022, with the easing of restrictions, is meant to be a breath of fresh air. But the Ukraine-Russia conflict erupted and supply chains were further disrupted.
Manufacturers, dealerships and automotive repair shops face the challenges posed by this issue. It’s far from over, at least according to 92% of American consumers. It is therefore interesting to dwell on the effects of the supply chain problem of 2022 on auto repair, manufacturing and car sales.
Auto repairs take longer
Auto repairs take longer. This doesn’t just speak to customers, but also to auto repair shops, which could see a drop in customer satisfaction and retention.
On average, it only takes two to five days to have a car repaired. But with the current situation, customers have to queue and who knows for how long.
An auto repair shop owner said in an interview that a customer had to wait six weeks to have their bumper repaired because supplies were delayed.
Another Morton Grove owner said that acquiring parts is very difficult because suppliers don’t have the part or inventory is depleted.
With the scarcity of auto parts, vendors are selling their items at higher rates. It is estimated that the cost of spare parts will increase by 5% by the end of 2022. This will force customers to invest more for repairs. The problem is that no one wants to pay a large sum for an auto repair service that takes weeks or more. And so, auto repair businesses could be impacted if this auto parts supply chain issue does not improve.
As what’s to come remains cloudy, auto repair shops might find insurance very useful. Auto repair companies can get cheap quality protection from some insurtech companies like Next. Next recently announced that it will provide auto service insurance in addition to spark plug insurance, electrician insurance and many other commercial products. See NEXT insurance reviews on Insuranks for more.
Auto manufacturing is a walking turtle
Supply chain issues have affected the manufacturing of essential products, not just food or clothing, but also automobiles.
S&P announced in January that production of light vehicles could decline to 5.7 million units. Boston Consulting Group further asserts and states that the decline in automotive manufacturing will persist through 2024.
Automotive retailers are feeling the effects. Inventories are at their lowest and can only supply one month of car sales. Looking at more specific numbers, inventory shortages due to a drop in manufacturing led to the sale of 14.482 million units in February, down 6.6% from the previous month.
The root of this big problem is a small component that car engines and electronics need to work well – microchips.
Covid-19 was the first to cause the shortage of microchips in the global supply chain.
“The biggest problem is the shortage of computer chips. Companies that make semiconductors simply couldn’t keep pace with how quickly demand for cars has returned from pandemic lows. And there are a lot of computer chips in modern cars. says Camila Domonoske, NPR.
And then came the Ukrainian-Russian crisis. Before the clash, the United States bought 90% of its neon in Ukraine. Neon is used to make microchips used in cars and consumer devices.
Now that Russia is crossing the country’s borders, automakers are facing a shortage of microchips, which is slowing manufacturing.
But Intel, Micron and Global Foundries – the major microchip makers in the United States – aren’t waiting for the final nail to be placed. Reports suggest that everyone is considering looking for alternative sources. The microchip shortage happened in 2014, and companies have already learned a lesson or two.
Difficult to buy specific cars
Chips are few but assembly line units are still plenty. The result? Automakers had to suspend production of some cars. But still, most of the models are in the market but without some features.
Car dealerships are looking bare right now and customers are finding some models rare. 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 making such a decision, Ford had ceased operations at its plants in Ohio and Kentucky. Ford’s Michigan plant manufactures the Mustang. The Ohio plant – the Ford E-Series, F-650 and Ford Super Duty. Finally, Ford manufactures the Expedition and the Navigator in Kentucky.
Last month, Toyota announced the temporary suspension of one of its factory lines assembling the Noah and Voxy minivans. Production of 14,000 units is affected by the decision.
Although set to return to the United States by this year, Mercedes C-Class sedans are still in short supply. Indeed, the automaker has explicitly announced that it will stop selling some of its mainstream cars for the 2022 model year due to supply chain issues and other factors.
The suspension of production will affect the availability of certain automobiles and will not have a significant impact on consumers. Nevertheless, those who manage to buy their favorite vehicles should be prepared for a few surprises.
Those who buy the 2021 and 2022 BMW 4 Series, 3 Series, X5 and X6 models will find that their vehicle lacks the usual touch input in its central information display.
Chevrolet enthusiasts should be prepared to find that the Chevy 2500 (2021 and 2022 models) does not have HD Radio.
Auto retailers and auto repair businesses are facing the challenges posed by the supply chain problem of 2022. But customers will also feel the impact.