The post Q3 2023 North America & Europe Auto Industry Report: “Resilience and Revolution Navigating Financial, Technological and Political Landscapes in Manufacturing” appeared first on Seraph.

The post Q2 2023 Industry Report North America & Europe: “EV, Not So fast. Challenges on the road Ahead: MACCE (Manpower, Agility, China, Costs, EV)” appeared first on Seraph.

The post Q1 2023 “Buckle Up: Navigating the Evolving Landscape of the Automotive Industry” appeared first on Seraph.

The post Q4 2022 “Automotive will never be the Same” appeared first on Seraph.

The post 2022 North America Automotive Market Update appeared first on Seraph.

While not perfect, projections of future market demands afford organizations the best chance to properly allocate capital and manpower to have successful launches and sustained operations. The North American Automotive market was down 14.7% in 2020. Despite this significant drop, the market recovered much quicker and stronger than expected following the initial downturn brought on by COVID-19. Initial projections forecasted finishing 2020 at between 11 and 12 million units. Instead, the market rebounded strongly to 14.6 million units. Some believe that 2021 will see a return to 16 million units. Any of these projections should be taken with caution. In the first weeks of 2021, multiple OEMs have reported shutdowns over the coming weeks due to chip shortages. While a single event will not take millions out of the total output, disruptions across the supply chain are likely to continue through much of 2021.

Where is the North American market going & who will win?

Current planning from the automotive OEMs shows that demands for pickup trucks will grow slightly in 2021 and remain stable through 2025, at 3.2 million units. While a very important and profitable segment in the United States, this represents just 20% of market unit volume. This is also a segment dominated by three players, Ford, General Motors, and FCA.

Sedans have seen a declining market share for years, prompting several large OEMs to exit the segment entirely. Commanding roughly 30 % of the market in 2018, sedan market share is projected to decline to less than 20% of the market in 2025. That represents a drop in 1.5 million units annually, equivalent to shuttering 5 to 6 North American assembly plants.

The real growth opportunity is in the sport utility vehicle (SUV) market, which is no surprise to anyone following the industry or traveling to a family activity. The growth of SUVs of all sizes is expected to grow to dominate the North American automotive market, reaching more than 55 % of annual sales by 2025.  Winning companies in North American will have to offer a wide variety of SUVs to fit the demands of buyers. Most OEMs are responding, offering small, medium, and large SUVs.

Dangers Ahead and Sales Losses

To capitalize on this market, every OEM must navigate the disruptions that will come in 2021. Unlike the truck market in North America, loyalty among SUV buyers is not as strong. Buyers in the truck market tend to be fiercely loyal to a brand (just ask Toyota and Nissan how hard it has been to grow market share in the full-size trucks market). In the SUV market, the American brands are fighting fierce competition from every corner. Japanese and Korean manufacturers are making gains in this area. The SUV of the Year award last year went to the new KIA Telluride. Demand for this vehicle remains strong, with customers waiting up to 3 months to take delivery of their new vehicle.

2020 data

With the rollout of vaccines and the change in administrations in the United States, many economists believe that there will be a release of pent-up demand in the second and third quarters. Automakers in this critical segment must be ready with vehicles on dealer lots for cash-rich buyers to hand over. Vehicle inventory levels in the North American market, specifically in the United States continue to be a concern for OEMs. The prevailing wisdom is that an inventory level between 45 and 60 days is good for sales for in-demand vehicles. Below 45 days and customers will go elsewhere to satisfy their desire for a new car. Above 60 days is a cause for caution, with inventory levels above 90 days being a call to slow down production operations. As a frame of reference, in the 2008 financial crisis, some OEMs reached levels of more than 100 days on hand. This resulted in shortening production weeks to 4 days and extending planned shutdowns.

Of those OEMs reporting this data, inventory levels went from between 50 to 60 days in the first quarter of 2020, to over 100 days in April and May. Plants were idled as COVID-19 restrictions took hold. However, the strong push on the sales side to move to contactless transactions, along with stimulus checks, generous rebates, and favorable financing deals (e.g. 0 % for 84 months), inventory levels dropped to under 40 days by the end of the third quarter. This was even after OEM plants came roaring back to life. Supplier shortages, supply chain issues, and high absenteeism across the OEMs and the supply base has made it difficult to restock the inventories on the vehicles people want. Go down to your local dealer and see how low they are SUVs and trucks, and this challenge will become clear.

With the recent news around chip supply constraints lasting at least through the first quarter of 2021, the challenge to rebuild inventories will increase in difficulty. The winners in this race will be those that can work with their suppliers to maximize supply, minimize the impact of subsequent disruptions, and satisfy immediate customer desire.

Gaining Visibility Through the Supply Chain

Besides having good predictions of future market growth, a key to keeping assembly plants running smoothly is to manage the highs and lows in the supply chain. Without visibility and transparency, two and three tiers deep, this is nearly impossible to do. The legacy systems that the different OEMs use to communicate with suppliers are ill-equipped to address this level of detail. Likewise, keeping informed of daily performance becomes nearly impossible when you are talking about hundreds of key suppliers located across the nation and around the world. If the OEMs could gain that visibility, they could manage those supply chains and their own daily production volumes more effectively.

One of the most effective ways to do this is to have a system in place where key suppliers can report their daily performance results for key components via cloud-based solutions. Quickly integrating a new system that requires hardware or some specific software upgrades can be problematic and costly. A cloud-based system that can be quickly deployed and provide the right level of information is key. Simple and straightforward is what is needed.

If your organization is struggling to understand the market and maintain transparency throughout your supply chain, then contact the team at Seraph. We have the experience and expertise to help you stabilize your operations and gain the much-needed transparency throughout your supply chain. Our ProductionNet tool is a cloud-based solution that we can have up and running, delivering useful data in 48 to 72 hours, without hardware or software installation on legacy systems.

The post 2021 Automotive Outlook: Market share will be dependent on production capacity appeared first on Seraph.