How Global Supply is Affecting the Motoring Industry
Global supply is one of the most important factors in keeping production lines running. In the current climate, the motoring industry is under enormous pressure since there is a supply problem in the automobile industry due to a scarcity of semiconductors and the conflict in Ukraine, preventing shipments of essential components.
The industry is very reactive to any changes in the supply chain and global impacts. As the automotive market is shifting to electric, this means that manufacturers need to implement new production lines and be able to find suppliers for the new components on the new powertrains. These impacts and changes see challenges grow for manufacturers and businesses in the motoring sector.
What is the Global Supply Chain?
A global supply chain is a network that connects a company with its suppliers, customers, and other parties involved in converting raw materials into marketable items. The smooth operation of the global networks of producers, suppliers, warehouses, carriers, distributors, and retailers depends on global supply chains.
Supply chains contribute significantly to customer satisfaction through the distribution of goods and services. Effective supply chains are essential for lowering operational costs across the supply chain, including operations, logistics, and procurement.
What Global Causes Are Affecting the Supply Chain?
The COVID pandemic caused a decrease in workers across the UK. Many EU nationals working in the UK moved back to their home country soon after the pandemic began. It was estimated that 1.4 – 1.5 million EU nationals left and haven’t returned. Training for new staff was halted, causing a reduced amount of newly qualified staff, and companies across the economy faced disruption due to COVID-19 self-isolation rules.
Brexit has made the movement between countries more difficult, and therefore EU nationals are finding it harder to be accepted for a visa. Sectors such as agriculture, food manufacturing, and haulage are still feeling the effects due to being unable to find replacements, as many of their workforces are EU nationals.
The price of raw materials, energy, logistics, and digital services will undoubtedly continue to rise due to the situation in Ukraine. Due to the heavy reliance on imports from Russia, the source of 40% of Europe's gas, gas, and oil prices have risen worldwide.
What Have These Global Causes Impacted?
Global gas prices have risen dramatically due to high post-lockdown energy demand and a curb on supply from Russia to Europe. The UK may have been more vulnerable to rising prices than many other European nations due to a lack of gas storage facilities. This led wholesale UK gas prices to spike in December 2021 at nine times the price that it was in February 2021.
Global shortages of electronic components, including printed circuit boards, semiconductors, and microchips, have been caused by factory closures during the pandemic. This has impacted the supply of new vehicles, electronics, and household appliances, making it difficult for manufacturers to keep up with the growing worldwide demand and creating significant backlogs.
September 2021 saw the smallest number of registered new cars in the UK. As a result, second-hand car costs have significantly increased.
Some commodities now cost more because of increased shipping costs worldwide, hitting a record high in September. The average cost of shipping a standard large container was four times higher than in September.
What Effects Are Global Shortages Having on the Motability Scheme?
Motability has seen a reduction in the number of cars available due to shortages and delays in the production of vehicles. However, there are still several models that you can choose from through the Scheme. Click here to see what cars are available.
The delays are, unfortunately, causing extended delivery times, meaning you might have to wait a little longer than expected to receive your vehicle. But be rest assured that your vehicle will get to you. Perrys relies on updates from the manufacturers about every car that is ordered, and these updates will be passed to you as soon as possible to keep you in the loop about your vehicle.
The Effect on the Motor Trade
On average, 30,000 components are needed to build a single vehicle. If the supply of any of these components is disrupted, a ripple effect occurs from the production line to the customer.
The pandemic caused factories to close, therefore causing shortages of semiconductor chips. These chips are used for critical functions such as sensing, safety features, power management, displays, and control features. Some modern hybrids need 1,500 chips to complete the build.
The shortage of these chips has had an impact on the production lines, therefore, a reduction of new cars and lengthened delivery times. Due to this, people have turned to used cars, increasing the prices in the used car market.
Manufacturers have now been asked to adopt the ‘Just-in-Time’ model. A difficult process to execute as the production of goods needs to meet customers’ demands exactly on time.
Tags: *Supply *Motability *Global *Delivery *Production *Manufacturers