Vendigital: Coronavirus – how far could supply chain disruption spread?

by Vendigital

Dominic Tribe is a director and automotive sector specialist at Vendigital.

With the COVID-19 coronavirus pandemic impacting global supply chains, concerns are growing that some automotive OEMs could be forced to switch components or find alternative sources of supply.

This disruption is inevitably impacting the aftermarket too, forcing dealers and independent service centres to take similar action, just to remain operational. But how far should dealerships and independent service centres go to prepare for the worst?

Tesla recently announced that it will not be using HG-3 self-driving control chips in its Model 3 cars made at its gigafactory in Shanghai for the time being, due to a supply shortage linked to the coronavirus pandemic.

Instead the cars will be fitted with HG-2.5 chips and customers have been promised a free upgrade when normal supply chain service is resumed.

The move has generated complaints and news reports suggest that some customers are considering legal action.

Most automotive manufacturers are experiencing supply chain disruption – with some opting to shutdown plants temporarily or cut production in some territories altogether.

For the aftermarket, the shortage of parts is equally disruptive and if the situation continues to worsen, many dealerships and service centres could face financial difficulties and an increased risk of warranty-related disputes.

While it is difficult to prepare for a fast-moving situation, where the outcome is not known, there are steps that the aftermarket can take to mitigate risk and minimise operational disruption as the crisis unfolds.

Optimising your supply chain

In order to stay competitive and optimise profitability, most dealerships prefer to limit inventory and keep their supply chains as short and lean as possible…

Read the full article on the Vendigital website