A report by Cox Automotive has called for cooperation between vehicle manufacturers and “serious” investment in supply chains to overcome emerging survival fears.
The report, published in automotive services organisation Cox Automotive’s latest AutoFocus quarterly insight report, said OEMs (original equipment manufacturers) must “seriously invest” in areas such as supply chain, vehicle distribution and technological evolution if car brands are to thrive.
It observed that as the market continues to evolve with new drivetrain technologies, corresponding investments into autonomous vehicles and mobility services mean OEMs have been forced to channel even greater spend into their supply, distribution and retail chains.
The report also called for manufacturers to scale up crucial aspects of their businesses and develop new partnerships to overcome automotive manufacturing challenges.
Cox Automotive insight and strategy director, Philip Nothard, said automotive manufacturing’s challenges are severe, prompting increasing need to engage and collaborate with other manufacturers.
He said in the report: “We are seeing a new willingness on the part of OEMs to join forces to overcome the problems that have faced manufacturing in recent years.
“Serious cooperation must be welcomed, especially given the mutual benefit inherent in such partnerships. However, more needs to be done to navigate the strongest headwinds faced by the industry for decades.”
Accounting firm Grant Thornton head of downstream automotive, Owen Edwards, said pressure on supply chains has led to unpredictability, with manufacturers also facing “bottlenecks to sourcing raw materials and labour shortages”, as employees drift away from manufacturing and production jobs.
He argued that strategic changes will be necessary to develop the scale needed to provide more significant returns on capital investment. This would mean focusing on new markets and engaging in more partnership agreements.
Edwards said: “Whether it’s supply chain or distribution of vehicles, continued technological evolution and the significant investment required, the automotive industry is being forced to consider different options to gain economies of scale and achieve the return on investment necessary to satisfy shareholder demands.”