The automotive industry is an essential part of both the UK and global economies. Yet the industry suffered its worst year in 2022, with the registration of new cars decreasing by approximately 24% compared to the same period in 2021.
Low car sales are just one problem the automotive industry has faced in recent years as the global pandemic, climate change, and other factors continue to have a lasting impact.
Read on to understand more about the make-up of the automotive industry and gain a closer look at some of the problems that currently affect them. As well as how manufacturing ERP software can help you combat many of these challenges.
What kinds of businesses fall within the automotive industry segment?
Original equipment manufacturers, or OEMs, are behind the creation of the many components needed for vehicle assemblies, such as brakes, exhausts and more. They can also be responsible for the manufacture of aftersales products that add value to vehicles and provide them with specialised features.
Those fabricating and producing rubber components also factor as major players within the automotive industry. Rubber production teams create several items including hoses, tyres, belts, seals, wiper blades and other key parts.
In addition to the above, there are dedicated manufacturers focused on creating replacement parts and aftersales components – such as brakes, lights, clutches, filters, bulbs and more –again these types of businesses are central to the smooth running of the industry and many of which continue to also be affected by the challenges being faced.
A final group of businesses are those now focused on the electric vehicle segment, including specialist component manufacturers and rental agencies and dealerships.
Key problems within the automotive industry
Three main issues within the automotive industry include:
1. Component shortages
The automotive industry is currently experiencing a shortage of vehicle components, such as semiconductors. Semiconductors are a vital component of microcontroller units, which facilitate functionality such as the transmission of airbags among many others. This shortage prevents manufacturing teams from continuing with the production cycle and impacts demand. Component shortages of any kind mean that some consumers could be waiting up to 12 months to receive their new vehicles.
2. Electric vehicle demand
The continuous rise in petrol and diesel prices is prompting many consumers to purchase electric vehicles. A sudden trend increase sees manufacturers struggling to, or hasten the pace of innovation to, keep up with demand. Increased demand has a knock-on effect, seeing delivery timescales on electric vehicles reaching up to 40 weeks to a year to be available.
3. New equipment
With new demand, the need for traditional mechanics decreases and is replaced with methods to cater for new technology. Mechanics also may be required to trade in tools like their traditional socket sets for electrical diagnosis equipment. Electric mobility means that manufacturing businesses may also need to hire more specialised production teams or upskill the existing workforce to prevent skills gaps when building and servicing electric vehicles. Electric vehicles require specialised components, such as powertrain batteries, requiring different skills to manage.
How to improve vehicle manufacturing processes?
Advancements in online sales and factory automation are balancing out some of the challenges outlined above, which are being faced by the automotive industry. Yet enterprise resource planning, or ERP, tools are another solution that can help automotive businesses gain an advantage, optimise processes, foster collaboration between departments and open new lines of communication.
ERP software is a tool, which can be an online or desktop-based platform, that helps automotive OEMs and suppliers to integrate entire, end-to-end business processes. Including everything from supply chains, operations, manufacturing, forecasting and performance financials. ERP software solutions are particularly useful for smaller businesses in the industry looking to lower project delays, for example, to meet consumer demands more quickly. Use smart estimates and forecasts based on your live data, whilst providing recommendations on what and when to purchase raw materials in advance, leveraging lead times and finding workarounds to the shortages you may face.
ERP systems offer complete transparency and traceability, allowing automotive businesses to determine inventory needs and assess profits. It serves as a unified platform where you can link with customers, suppliers, and distribution teams all in one place.
Uncertainty is something most industries are facing especially with unforeseen supply chain issues and new sales trends always occurring. Yet ERP software can help businesses like yours within the automotive sector to streamline and automate workflows, allowing you to save time, energy, and resources while reducing errors. Access to multiple data points allows you to foresee problems and respond proactively.
Get in touch with WinMan ERP Software to learn more about the advanced on-premise and cloud ERP solutions today.
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