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Multi-part shortages Increased fleet downtime – Market Trends


There are many reasons why parts shortages continue to linger and we can only hope they improve in 2022. - Antich

There are many reasons why parts shortages continue to persist and we can only hope they will improve by 2022.

Antich

As we all know, there were persistent inventory shortages for many auto parts throughout the calendar year 2021. The biggest impact was due to a shortage of microchips, which led to the temporary shutdown of some assembly plants set up by most automakers, resulting in the loss of the entire new-vehicle manufacturing industry. .

But the auto parts shortage the industry is experiencing today goes beyond the microchip shortage. Today, there are many auto parts shortages that vary by part type, make and model. Today, when a car has an unexpected repair and a part has to be ordered, it seems like no one knows exactly how long it will take to repair that car. Repair facilities do not know when the ordered parts will be returned. The bottom line is that these part limitations are making repair jobs take longer to complete, thereby prolonging fleet downtime and increasing fleet costs.

Extended service life

This situation is made worse by the fact that many vehicles in today’s fleet are being kept in service beyond the expected replacement date due to the limited number of new replacement vehicles. Long-haul fleet vehicles that have been serviced outside of their scheduled replacements are now experiencing predictable unexpected repair problems. When this happens, if the required replacement part is not in stock or is in short supply, this will affect the time it takes to complete the repair, which will delay the return of the convoy vehicle to the road. generate revenue. This is especially true for convoy vehicles that have been involved in an accident. Parts binding is a big problem at crash repair shops. Today, on average, it takes 15-30 days to receive body-store parts compared to pre-COVID in 2019. The frequency of these delays increases as the replacement ingredient contains micro-organisms. embedded circuit, the supply is in significant shortage. .

In addition to national account providers, franchisees and independent service shops are also affected by the limited supply of auto parts, often having to wait several weeks for delivery, with Some parts can be ordered back two to three months. All of this has resulted in longer repair cycles – measured by the time it takes for a vehicle to arrive at a repair facility until it’s been repaired and taken care of by the vehicle’s owner. Today, vehicles can sit idle at service centers for weeks just waiting for an essential part to arrive.

During this period of inventory scarcity, component prices have increased by an average of 20%-30%. One factor driving up parts prices is the higher cost of the items used to make them, especially if they’re made from items that are in high demand, such as copper or steel. Higher commodity prices increase production costs and reduce profit margins for component manufacturers, putting upward pressure on component prices. For example, copper, aluminum and steel prices are currently at high levels. These incremental costs are being passed on to the end user.

We have heard the reasons why there is a shortage of automotive microchips, but there is no definite answer as to why there is a shortage of auto parts in general. There are countless factors.

Among those cited for the parts shortage were:

  • The high demand for some commodities is being competed by various industries, which is prolonging the time to obtain these raw materials, thus extending the production time.
  • Another reason given is that over the past few decades, the production of spare parts has become commonplace by “cutting” or outsourcing. As the COVID pandemic has been affecting different parts of the world at different times, it has disrupted a number of different supply chains.
  • A large volume of manufactured parts have been outsourced to Asia. These parts are usually shipped to the US by container ship. And because there is a global backlog in ocean shipping, inventory imported into the US is also delayed. This is not only true for automotive products but for most goods shipped to the US
  • There is a shortage of frame trailers for transporting containers, which increases transit time. Another factor is the shortage of drivers in the US, which has limited the overland transportation of parts from ports to distribution centers to repair facilities. It seems that at every touchpoint in the production and distribution of automotive parts, there is some incremental delay.
  • New container ships are being built bigger than ever, with super-large vessels capable of carrying 24,000 containers. On average, container ships today are a third larger than they were last year, so they take about a third more to unload.
  • And there are other short-term effects that are exacerbating the divisions’ limitations. For example, some companies are stockpiling auto parts and/or even selling them for their customers’ use, not wanting to sell parts to other dealers as they have done in the past.

In short, most trace the beginning of today’s parts shortages starting in winter 2020. But it should be remembered that this is not the first time parts shortages have occurred in the umbrella industry. United States auto. For example, in the early years when sales of imported cars were increasing, their spare parts inventory lagged behind sales growth causing delays in the repair cycle.

While parts shortages are not a new problem today, what is new is a higher frequency of shortages that are occurring, which is having a more widespread impact on the overall repair cycle of vehicle fleets. distributed nationwide. So how long will this go on? It is forecasted that the imbalance of supply and demand for auto parts will continue to deepen in CY-2022.

Let me know what you think.

[email protected]

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Author

Mike Antich

Mike Antich has been fleet management and remarketing for over 20 years and was inducted into the Fleet Hall of Fame in 2010.

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Mike Antich has been fleet management and remarketing for over 20 years and was inducted into the Fleet Hall of Fame in 2010.

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