There are many reasons for why parts shortages continue to linger, and we can only hope they improve in 2022.   -  Antich

There are many reasons for why parts shortages continue to linger, and we can only hope they improve in 2022. 


As we all know, there have been ongoing inventory shortages for many automotive parts throughout the 2021 calendar-year. The biggest impact has been caused by the microchip shortage, which has led to sporadic temporary shutdowns of a number of assembly plants instituted by most automotive manufacturers, resulting in lost new-vehicle production industry-wide.

But the automotive parts shortage that the industry is experiencing today goes far beyond just the shortage of microchips. Today, there is a wide cross-section of automotive parts that are in short supply varying by type of part and make and model of vehicle. Today, when a vehicle incurs an unscheduled repair and a part has to be ordered, no one seems to know exactly how long it will take to fix the vehicle. Repair facilities don’t know when back ordered parts will be received. The bottom line is that these parts constraints are causing repair jobs to take much longer to complete, thereby lengthening fleet vehicle downtime and increasing fleet costs. 


Extended Service Lives

This situation has gotten worse as many of today’s fleet vehicles are being kept in service beyond their scheduled replacement date due to limited availability of new replacement vehicles. These high-mileage fleet vehicles that have been kept in service beyond their scheduled replacement dates are now experiencing the predictable uptick of unscheduled repair incidents. When this occurs, if the needed replacement part is not in inventory or is in short supply, it impacts the time to complete the repair, which delays getting the fleet vehicle back on the road to generate revenue. This is especially true for fleet vehicles that have been involved in an accident. Parts constraints is a major issue at collision repair shops. Today, on average, it is now taking 15-30 days longer to get parts at body shops compared to the pre-COVID period in 2019. The frequency of these delays increases when the replacement component contains embedded microchips, which are in woefully short supply.

In addition to national account vendors, franchised dealers and independent maintenance shops are also impacted by the constrained supply of automotive parts, often having to wait several weeks for shipments, with some parts on back order for as long as two to three months. All of which has resulted in longer repair cycles – measured by the time when a vehicle comes into the repair facility to when it is repaired and picked up by the vehicle owner. Nowadays, vehicles can sit non-productive at service centers for weeks just waiting for an essential part to arrive. 

During this inventory shortage, parts prices have gone up 20%-30% on average. One factor causing parts prices to increase has been the higher costs of the commodities used to manufacture them, especially if they are made of high-demand commodities, such as copper or steel. Higher commodity prices increase manufacturing costs and reduce the parts manufacturers’ margins, putting upward pressure to increase parts prices. For instance, the price of copper, aluminum, and steel are currently at elevated levels. These increased costs are being passed on to end-users.

We’ve heard the reasons why there is a shortage in automotive microchips, but no definitive answer as to why there is a general automotive parts shortage. There are a multitude of factors. 

Among those cited for the parts shortage are:

  • The high demand for some commodities that are being competed for by many different industries, which is lengthening the lead time to get these raw materials, thereby lengthening production time. 
  • Another reason given is that over the past several decades, there has been a widespread “off-shoring” or outsourcing of the manufacturing of spare parts. Since the COVID pandemic has been impacting different regions around the world at different times, it has disrupted some supply chains differently.
  • A large volume of parts manufacturing  has been outsourced to Asia. Those parts are typically shipped to the U.S. by container ship. And because there is a global backlog in maritime shipping, imported inventory to the U.S. is also delayed. This is true not only for automotive products, but for most merchandise being shipped to the U.S. 
  • There is a shortage of chassis trailers to haul shipping containers, which increases lead times. An additional factor is the shortage of drivers in the U.S., which constrains the over-the-road transport of parts from ports to distribution hubs to repair facilities. It seems that at every touch point in the manufacturing and distribution of automotive parts, there is some incremental delay.
  • New container ships are being built larger than ever, with the larger mega-ships capable of carrying 24,000 containers. On average, today’s container ships are a third larger than yesteryear, so consequently they are taking about a third longer to unload. 
  • And there are other short-term impacts that are exacerbating the parts constraints. For instance, some companies are stockpiling automotive parts and/or even hording them for use for their customers, unwilling to sell parts to other dealers as they have done in the past.

In conclusion, most trace the start of today’s parts shortages back to winter of 2020.  But it is worth remembering that this isn’t the first time that parts shortages have occurred in the U.S. automotive industry. For instance, in the early years when import vehicle sales were increasing, their inventory of spare parts lagged behind the sales growth causing delays in the repair cycle. 

While today’s parts shortage isn’t a new problem, what is new is the higher frequency of shortages that are being encountered, which is making for a more widespread impact on overall repair cycles for nationally dispersed fleets. So how long will this continue? The forecast is that the imbalance between supply and demand of automotive parts continue deep into CY-2022.

Let me know what you think. 

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Further Reading

Four Steps to Reduce Vehicle Downtime 

Unscheduled Maintenance Costs Increased 3% in CY-2021

Originally posted on Automotive Fleet