Automotive Supply Chain Trends 2024

The automotive industry is at a critical juncture of global competition and transformation, demanding firms to develop and implement new business strategies. Technological innovation, a critical strategy, allows firms to avoid destructive price competition and establish unique selling propositions. The automotive sector is profoundly reshaping the supply chain ecosystem and how consumers interact with automotive enterprises. Suppliers and auto manufacturers face the challenge of maintaining profitability while navigating supply chain disruptions. 

A BCG report states that  80% of companies across sectors remain unprepared to address disruptions quickly and are not structured for long-term resilience. There is a dual spectrum of automotive supply chain issues and opportunities as consumer preferences shift towards immersive digital experiences, mobility and connectivity, shorter lead times, and sustainability. However, emerging technologies, including artificial intelligence (AI) and machine learning (ML), can change how the automotive industry works. Let’s explore the top supply chain trends in the automotive industry that will impact the industry in 2024.

Key Challenges for the Automotive Industry in 2024

As everything becomes digitized, the explosion of new technologies, artificial intelligence, and the need for more data enhancements have become prevalent. The concerns remain the same.

Will customers find new ways to shop for vehicles online? Will traditional dealership models endure the evolving consumer preferences and technology advancements? How will automotive brands innovate fast enough to meet the changing demands of tech-savvy customers and address the potential challenges? How will regulatory changes impact production development? These questions underscore the complexities facing supply chain management in the automotive industry. Let’s dive into the stability concerns and challenges that will likely persist this year in the car manufacturing supply chain: 

Labor Relations: Balancing shifting skill requirements, workforce needs amid automation, and potential labor disputes.

Inflation: Managing costs and pricing strategies on raw materials, labor, and operational expenses.

Competitive Pressures: Intensifying competition from traditional automakers, tech companies, and new players due to innovation.

Environmental Impact: Implementing sustainable manufacturing practices and addressing concerns over carbon emissions and resource depletion.

Supply Chain Disruptions: Managing disruptions caused by global events such as natural disasters, pandemics, and trade conflicts.

OEMs and suppliers seeking to win in the auto industry must focus on software-driven development processes, utilizing fleet data, supply chain collaboration, and flexible, feature-rich offerings across vehicle segments, considering consumers’ varying price points.

Transition to Electric Vehicles: The automotive industry has witnessed OEMs, suppliers, and investors rapidly progressing on the EV transition. PwC forecasts that EV adoption will accelerate from 5% to 30% by 2030. Over the next decade, carmakers are predicted to invest around $500 billion in building new factories and facilities to make electric vehicles (EVs) more common. In the US alone, EV-only manufacturing plants are expected to increase from nine today to 41 by 2029. 

FAQs

What are the current trends in the automotive industry?

Here is a list of trends shaping the automotive industry in 2024:

  • Adoption of electric cars
  • Increased sales of pre-owned vehicles
  • Rapid increase in digital automobile sales
  • Rise in Nearshoring/Reshoring 
  • More innovative online marketing strategies
  • Collaborative supply chain models
  • Increase in connected cars
  • Shared mobility
  • The emergence of fuel-cell electric vehicles

 Who are tier 1 suppliers in the automotive industry?

Tier 1 suppliers are organizations that supply parts or systems directly to OEMs. These suppliers usually work with various car companies, but they’re often tightly coupled with one or two OEMs and have more of an arms-length relationship with other OEMs.