Automotive industry hardest hit by supply-chain disruptions

Of the industries that have been most effected by the supply chain disruptions the car industry has taken the biggest hit with 52% of automotive supply-chain managers saying that disruption from COVID-19 to supply was very significant. The reasons for the automotive problems are:

Production stoppages – 48%
Trade restrictions – 24%
Access to raw materials – 12%

According to The Economist Intelligence Unit the problems associated with the shortage of semiconductors could have been avoided. Automotive producers cancelled orders of semiconductors at the start of the COVID-19 as they assumed that their spare capacity could meet the demand. Although the industry realised their mistake the allocation of semiconductors was mopped up very quickly by other sectors. The consumer electronics industries boomed as more people worked from home and spent income normally prioritised for leisure activities to other forms of entertainment. Access to raw materials was a major disrupter of other sectors – healthcare and food. With people in lockdown there was a considerable demand for food with eating out not a viable alternative.

East v West
It seems that more traditional supply chains (West) that have been developed over many years have been harder hit than more recent supply chains (East). Regionalisation has been the focus in North America and Europe but less so in Asia. Smaller companies are now localising their supply chains as COVID has been the catalyst to rethinking strategies with a renewed focus on flexibility.

Source: DISRUPTION, DIGITISATION, RESILIENCE: The future of Asia-Pacific supply chains. The Economist Intelligence Unit. 2021

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