COVID-19 has impacted every industry, and the car parts sector is no exception. Here, Mark Barclay, Ecommerce Manager at GSF Car Parts outlines the pressures the industry has faced, and how we can learn from the experience going forward.
What was once a strong and stable industry for the UK, the car parts sector has been rocked by the pandemic. Every step of the supply chain has suffered the brunt of COVID-19, which has had a knock-on effect to the industry as a whole. But how exactly has the automotive sector been affected, how has this impacted motorists, and what can we learn for the future?
What are the challenges facing the motor industry?
No sector has escaped the impact of the pandemic. And while the country is starting to get back on its feet, the long-term effects are still being felt throughout the motor industry. While social distancing measures have reduced staff numbers in manufacturing plants, perhaps one of the biggest issues the sector has faced is with trade. For an industry that’s so reliant on the ability to import and export goods to and from abroad, most commonly from China, the global shutdown has been catastrophic. That’s not counting the effect that Brexit has had on trading during this same period.
While this had a temporary impact during the pandemic — and led to many plants lowering production or closing altogether — the pressure still remains. As ports across the world open up, they’re becoming congested as each industry tries to make up for lost time. Consequently, we’re still seeing delays for various crucial car parts, most notably a shortage of semiconductor chips.
These chips were already difficult to come by during the height of the pandemic. As demand for TVs and webcams boomed during lockdown, the motoring industry was at the back of the queue. And, as these parts are vital for a wide range of safety features, including emergency braking systems and steering, we really can’t do without them.
These shortages mean many plants are continuing to work at a lower capacity, and output has showed a significant reduction. In some cases, plants have had to put vehicles aside until they can finish building, and some manufacturers have been forced to postpone the introduction of new models until the effects begin to subside. In July, new car registrations fell by -29.5% to 123,296 units, according to data from the Society of Motor Manufacturers and Traders (SMMT). That’s down by -22.3% compared to the average recorded over the past decade.
This then has a domino effect on the rest of the vehicle manufacturing industry, as many businesses have had to cut research and development funding to prop up their current operations.
How has this impacted motorists?
A reduced supply chain has a knock-on effect to motorists too, not only those in the market for a new vehicle. Lower production means many drivers are having to wait months or even a whole year for a new car. This has driven sales of second-hand vehicles. The UK’s used car market grew 108.6% in the second quarter of 2021, according to data from SMMT. This is up 6.6% on pre-pandemic levels, and is due to parts shortages and long lead times forcing customers to shop pre-owned instead. This is great news if you’re thinking of selling your car sometime soon. As the country reopens and many people remain wary of public transport, demand for used vehicles is much higher than previous years.
If your vehicle is in need of repairs, you could feel the effects too. Postponed MOTs, garage closures, and a bigger focus on used vehicles is putting even more pressure on the industry, and with car parts already low, servicing and replacement costs could rise as a result.
What have we learned and what does the future hold?
The good news is, with more people choosing personal transport rather than public, the motor industry will bounce back. The demand is still there, so it’s all up to manufacturers to get back on track.
As there’s no telling just how long supply chain delays will be around for, many manufacturers have decided to adapt, rather than wait. If the pandemic has taught us anything, it’s how important it is to be agile, and sometimes the hardships we face can make room for new innovation.
The motor industry has already embraced automation, but there could be more room for investment if we are to withstand any future obstacles. As businesses choose to retain social distancing measures, robots can help keep productivity high, while maintaining health and safety.
In order to future-proof the automotive sector further, businesses may need to be a little smarter with their partnerships. Industry leaders will need to work together to overcome obstacles and, as vehicles switch to digitalisation and automation, this could mean that brands may need to collaborate with (rather than compete with) tech giants in order to survive.
Sourcing parts from UK-based suppliers as much as possible can also help reduce any down time in the future. Not only will this avoid any issues with importation, but it could significantly reduce lead times as parts will have much less distance to travel.
The automotive industry has certainly felt the effects of the pandemic. Reduced production, parts shortages, and long lead times may hold the industry back for a while yet. So, it’s vital for the sector to be able to adapt in order to stay afloat.