Supply shock! Aftermarket steps up as disruptions worsen
The automotive aftermarket is no stranger to challenging market conditions. Aftermarket businesses were left reeling from the Brexit and HGV driver disruption in 2020, only to be met with a global slowdown, higher freight costs and supply shortages caused by the Covid-19 pandemic.
Add to this the Suez Canal blockage and Red Sea shipping crisis (the latter is still an ongoing issue) and the sector, like many others, continues to face challenge after challenge.
Now, the conflict in the middle east is set to bring its own set of challenges with price increases and fuel surcharges just two measures being introduced to cope with volatile trading conditions. The entire supply chain of suppliers, motor factors, garages and motorists will be affected, and this extends well beyond oil and gas.
Impact
While each supply chain challenge highlights the structure’s own fragility, aftermarket businesses are increasingly adept at reacting to such tests, employing patience, empathy and its own brand of communication to help ease itself through the crisis.
Supply chain disruptions erode trust, reduce profit margins, and make it harder to stay competitive. Add to this the continued difficulty of managing a UK automotive business – such as tackling the increasingly complex issues of compliance and taxation, the skills challenge, mobility transition to new vehicle technologies and, right to repair access – then the sector has an unwelcome in-tray of problems, with no government help in sight.
Over-communication is key
Aftermarket businesses are already taking the initiative, showing resilience and intensifying their communications up and down the supply chain, in order to ensure everyone is aware of the current trading situation.
Over communication during this period will be key. Suppliers / importers are leading the discussions on supply chain conditions and motor factors are increasing their parts availability as lead times become longer.
Everybody in the aftermarket must now support garages in their communication to the motorist, in order to maintain trust and credibility.
Prices are going up
Without question, we can expect short term price shocks and while it is hope over expectation that the current trading condition is short term, there are worrying fears over a long-term global recession.
While the aftermarket by its very nature is “recession resilient”, we are not by any means “recession proof”. IAAF members up and down the supply chain are eager to invest in people, technologies and infrastructure. While the economic outlook deems it near impossible to do so, the sector remains undeterred.
Hope in uncertain times
I continue to see first-hand the sector’s ability to rise to a challenge, it’s innovation and service more than justifies its growing customer base of 34million+ drivers.
I believe the aftermarket shows the best of itself in difficult times. We did not invite or cause the disruptions that have affected our industry in the past six years, but I am confident that our businesses and people will overcome this latest challenge and emerge stronger.