Post-hurricane sales increase may lead to further knock-on effects as impacts of natural disasters emerge
The need for US residents to replace vehicles lost during recent hurricanes has helped boost September car sales in North America to an unexpected high. Major vehicle manufacturers experienced a year-on-year sales increase of up to 12% and the seasonally adjusted annual sales rate for light commercial vehicles in the country jumped to over 18.5 million units1. The short-term sales peak could have more broad ramifications for automotive production as the extent of supply chain disruption becomes clear, advises emergency logistics expert Evolution Time Critical.
“September is forecast to be the strongest month for new car sales in the US in 2017, but we could see this cause a future supply chain bottleneck as the industry recovers from the recent spate of natural disasters,” explains Evolution Time Critical managing director, Brad Brennan. “The immediate impact of natural disasters causes obvious damage to infrastructure and leads to delays, but the hidden factors can lead to more impactful longer-term disturbances. It’s only when the impact on Tier 3 and 4 suppliers becomes apparent that delays can reach the vehicle manufacturer and a shortage of components is visible.
“The stock of surplus new vehicles will initially absorb the mid-term impact of the majority of new sales” he continues. “But reserve stock component supplies that could be required when potential future delays emerge will also be drawn on. Normally an industry enjoying strong sales is unified with a robust supply chain, but in this case suppliers are still facing unclear knock-on effects from recent turmoil.”
A further potential impact is that the supply chain is already under increased pressure as it recovers from natural disasters, and this effects its ability to respond to further pressures, such as sales spikes. This can hamper suppliers’ ability to respond with the agility and speed that is now expected in order to maintain robust automotive production operations.
“Suppliers may be in the process of implementing contingency plans if their supply chain infrastructure has been significantly compromised and this can impact their ability to react to increased demand for components,” concludes Brennan. “The advantage that automotive has over other industries is that its supply chain – although complex – is highly robust and proficient at safeguarding its operations even during the most testing periods. Major vehicle manufacturers are aware of the crucial role played by supply chain fluidity and understand the benefits of implementing steadfast contingencies in partnership with a dedicated emergency logistics specialist.”
1Figures from Reuters UK.