February 2023
2023 is already off to a great start. Indications are that the vehicle shortage is finally starting to ease and there is light at the end of the tunnel. SAAR (seasonally adjusted annual rate) for January is already up to 16 million.
2022 finished with only 13.4 Million in US light vehicle sales, down from the 17 Million plus that was the pre-Covid era norm. This likely means we have around 8 million vehicles not purchased last year causing some pent up demand. However, higher interest rate in combination with higher vehicle costs may cause some of those buyers to hold off and continue to wait. Unfortunately the dealers are still fairly low on inventory and this will likely mean fleet allocation will limited once again this year. It’s expected that our OEM partners will be under pressure to rebuild dealer inventory and also to replace more production with new EV products. We also anticipate continued long lead times, but some improvement over prior years.
Fleets should start planning their 2023 vehicle sourcing needs and be ready to provide the OEMs with their allocation needs. This way, when the order banks open they have a plan and a goal and start placing orders. Remember that future production dates can be added to help spread production throughout the year, even if the orders are all placed in one bulk order.
Tim Cengel • Sr. Manager, Purchasing and Electrification
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Replacement Parts Remain in Short Supply with Prices Rising
No one expected the ongoing shortage of automotive replacements parts would last this long. Yet, even after two years, the shortages remain, continuing to impact the maintenance and repair of fleet vehicles.
These wide-ranging parts constraints — which also includes the shortage of microchips — are part of the much larger disruptions occurring throughout the global supply chain. These supply chain constraints impact a wide cross-section of automotive components, which vary by type of part and by vehicle make and model.
The bottom line, however, is that these parts constraints are causing much longer completion times for repair jobs, thereby lengthening fleet vehicle downtime, reducing driver productivity, and consequently increasing overall fleet maintenance costs.
These parts shortages first started to appear in the fourth quarter of 2020, and since then, a series of ongoing and sporadic inventory shortages have occurred for a variety of automotive components throughout calendar-years 2021 and 2022.
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Car industry set to miss climate goals by 75%, industry-backed study says
The automotive industry is expected to miss its climate goals by 75 per cent, a study backed by electric vehicle makers Polestar and Rivian has said.
The industry will dramatically overshoot the Intergovernmental Panel on Climate Change’s target to try to limit the average global temperature increase to 1.5ºC above pre-industrial levels by 2050 if car makers do not take action, the study said.
“Electrification alone is not the solution. Even if every car sold in the world tomorrow would be electric, we are still on track to overshoot,” Polestar and Rivian said in their Pathway report.
The companies said they had invited the world’s leading car makers to a round table and briefing discussion.
The report, which was released on Wednesday, suggests three “levers” to have a chance at achieving the target by 2050.
They are a firm end date for selling fossil-fuel cars and investing more in manufacturing capabilities of electric cars; the creation of more green charging options by investing in renewable energy supplies to global grids; and a focus on more sustainable supply chains.
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What can we expect from the auto industry in 2023?
Global automotive sales were hit hard by the pandemic; the market lost confidence and buyers remained understandably cautious, even when COVID-19-related restrictions began to lift. Light vehicle (LV) sales eventually started to rally in 2021 and thankfully moved up a gear in 2022—for the past 12 months, global LV sales are expected to show a 3.5% year-on-year growth. Interestingly, electric vehicles (EVs) and hybrids are where the industry has seen the most movement.
According to the latest EY research, EV sales are expected to outpace the market, with growth of around 48% in 2022 set to reach 9.4 million units globally. More importantly, what does 2023 hold in store?
The good news is that projected sales for the upcoming 12-month period look set to return to pre-pandemic levels with a growth of around 9%. Once again, EVs and hybrids provide a highlight; the sector is expected to grow by 29% year-on-year in 2023, to reach an estimated 12.1 million units globally. However, the threat of an impending recession and ongoing supply chain issues could cast a shadow over the personal vehicle market.
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