Did you buy a new car in 2021 – and was it a car you actually wanted instead of one you ended settling for? If so, count yourself among the very lucky few, most shoppers found themselves in the rather unique position of having to chase down a dealer instead of vice versa. On its surface, not being able to walk into a dealership and get the exact car you want might seem like a simple case of supply (chain shortage) meets (pent-up) demand, but it highlights a plethora of trends that will rock the automobile industry for the year ahead, if not the decade.

Parts Is Parts?

With the demand for new cars far outpacing supply, dealers are either facing vacant lots or having to make complicated swaps and trades with other dealers, all of which helped fuel a renewed interest in used vehicles. In fact, the price of a used car in 2021 reached a 68-year high.

With car owners who would normally purchase a new car having to rethink their options, many opted instead to keep their old vehicles and fix their existing car issues themselves (or with the help of a trusted mechanic), driving a big demand for aftermarket parts. The numbers are pretty impressive: DIY automotive activity and automotive e-commerce are expected to increase by 30% for 2021, a number that will most likely continue to grow as the pandemic – and supply chain shortages – march on. The proof is already here: the automotive aftermarket parts industry made $291 billion in 2020 and is projected to reach $325 billion by year end.  

The Chips Are Down

One of the reasons why you can’t find a new car for love or money is a shortage of some of the tiny components that give it the bells and whistles most consumers are after. If you’ve driven a smart vehicle, you know there are hundreds of semiconductor chips powering it – they give you visual navigation, cruise control, satellite radio, and hands-free calling, among other modern must haves.

With the chips powering the intelligent features in today’s cars having been in short supply since early 2020, car owners in need of replacement parts that contain them are keeping the aftermarket industry on its toes. Suppliers have to be ready to turn on a dime to rapidly adjust to and support the rising demand for such parts, which means they, too, increasingly rely on artificial intelligence (AI) to see the full playing field. AI-powered demand and replenishment platforms like the ones ketteQ provide offer a holistic view of each link in the chain, and suppliers are quickly realizing that they can use AI to their advantage and address critical bottlenecks in supply, production, and delivery

It’s Electrifying!

One of the bigger trends that climate change concern has helped foster is a sense of urgency about the environment and the role we play in protecting it. Cars are no exception – consumers are looking to drive vehicles that not only last but are good for the planet. The 5.6 million electric vehicles currently on the road underline the dramatic increase in sales from 3.4 million in 2018, but as with traditional fossil-fueled vehicles, they require unique parts that have launched a new channel for aftermarket distributors to manage. For example, 40% of electric car batteries are manufactured in China, but the country’s inability to keep up with global demand has created an even more critical need for supplier diversity.

One mitigation many suppliers (and consumers!) are seriously considering is how to recycle or remanufacture old batteries packs or electronics. The savviest parts distributers are increasingly leveraging modern supply chain management platforms like ketteQ’s to plan for and act on numerous “what if?” scenarios. One of the most critical components of staying at the front of the pack is being able to pivot operations at a moment’s notice, and the companies at the top are already proving how nimble they can be.

Hold Steady

The White House recently stated that quick recovery from an unexpected economic shock is the hallmark of a resilient system. This theory has been tested by the power crisis in China, which continues to have a long-reaching effect on raw material scarcity. Even prepared businesses have felt the pain caused by shortages of materials like magnesium, which is used in alloys, brakes, fuel tanks, and more. As anyone could predict, the rising cost of these materials is making the parts that use them even more expensive for aftermarket businesses.

The only way out is through but getting through is a lot easier when you can make your operation more efficient and effective. Here are some tips for weathering the storm to come:

• Improve your visibility. Software tools can help you automate and orchestrate data streams that will let you monitor your operations in real time, even when you’re merely modeling potential scenarios real or imagined.

• Build a buffer. You’ve no doubt heard the phrase, “Don’t put your all your eggs in one basket,” and as we’re seeing each quarter, this adage applies to the auto industry as well. It’s way past time to develop a diverse network of suppliers around the globe to help you avoid potential shortages in parts delivery.

• Be as agile as you can be. The true dinosaurs are the ones that can’t adapt to changes in the landscape, so if you want to come out on top, you need to develop the ability to quickly pivot to alternative processes or products as you go.

This list might seem daunting, but there are customizable solutions in place that can help keep you on the road and out of potential traffic jams. If you’re ready to future-proof your aftermarket parts or auto-manufacturing business, contact ketteQ today at www.ketteQ.com for proven solutions to your supply chain challenges.

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