US: suppliers are challenged by the massive sales and automakers’ production levels image

With US auto sales poised to reach almost unprecedented levels, you would say the good tales are reining across the automotive industry – but the truth is they’re the most welcomed, though not the easiest.

The very strong sales volume has lifted the pressure on the supply chain base to deliver the necessary parts that keep factories humming and working around the clock to satisfy the consumers. So far the suppliers have been able to cope with the latest challenges – become ever more global, deliver newer technologies, lower the costs and work even closer with the automakers. US auto sales are expected to surge past the 17 million units mark this year and could overcome the previous record set in 2000 of 17.4 million vehicles as early as next year. The sales last month already showed a seasonally adjusted selling rate of 17.55 million. Thus a large number of manufacturers are keeping their US factories at three shifts and plenty of overtime, especially the ones delivering pickup trucks, sport utility vehicles an crossovers. And global automakers continue to enforce their manufacturing base with additional facilities in growth markets such as Mexico, India or China.

But analysts and industry experts are already cautioning that besides lifting production output, manufacturers are also challenged to continuously reinvent their products and deliver them to the market faster because of the fiercely competitive market. This means the parts will be redesigned, engineered and produced ahead and this calls for more investments. And with a reduced vehicle lifecycle, the costs have less time to be recovered while rushing the products to the market also increases the chances of quality mishaps.