The Auto Industry Feeling the Pinch

The COVID-19 pandemic has had a wide range of impacts on businesses, and one of the most significant has been the disruption to the supply chain. This has been felt particularly acutely in the automotive sector, where a combination of production shutdowns and a decrease in demand has led to a critical shortage of new vehicle stocks.

Fleet managers are having to deal with the challenges posed by this shortfall, including increased costs, longer lead times and reduced choice. In this post, we’ll explore some of the ways that fleet managers can plan for the worst but make the most of the challenges ahead.

1) Increased Costs
The first and most obvious impact of the shortage is increased costs. With fewer vehicles available, prices are being driven up as manufacturers arguably seek to maximise their profits. This is likely to continue in the short-term as factories ramp up production to meet the pent-up demand from customers.

To mitigate against this, fleet managers should look at ways to reduce their overall spend. This may include negotiating better terms with suppliers or looking at alternative finance options. In some cases, it may even be possible to source second-hand vehicles that have been well maintained and serviced.

2) Longer Lead Times
Another challenge posed by the shortage is longer lead times for new vehicles. In some cases, customers are being quoted delivery dates that are six months or more after placing their order. This can cause difficulties for businesses that rely on vehicles for their operations, such as delivery firms or taxi companies.

To overcome this issue, fleet managers need to plan ahead and place orders well in advance of when they will be needed. They should also consider sourcing vehicles from multiple suppliers to spread the risk and ensure that they can still meet their demands even if some orders are delayed.

3) Reduced Choice
As well as facing increased costs and longer lead times, fleet managers are also finding that they have less choice when it comes to selecting new vehicles. This is because manufacturers are prioritising production of their best-selling models to meet demand and maximise profits.

In some cases, it may be possible to specify additional options or upgrades that are not essential but would improve the overall experience for drivers. However, in many cases, fleet managers will simply have to accept that they will not be able to get exactly what they want and instead focus on getting the best possible deal on the vehicles that are available.

Tough times are still ahead, but by planning ahead and sourcing vehicles from multiple suppliers, it is still possible to keep your business running smoothly during these difficult times.