If you tried to purchase an automobile or get your vehicle repaired in 2021, you were likely hit with one of two harsh realities: sky-high prices or painfully long wait times. These were the consequences of the global supply chain crisis. If the auto parts industry has learned one thing over the past five years, it’s that even a single kink in the supply chain can grind entire production lines to a halt.
The average vehicle contains around 30,000 individual parts, and if one of those parts becomes victim to a disruption in the production process, it can have a domino effect that spans from cargo ports overseas to your local repair shop.
Recently, global supply chains have become a hot-button topic. But why now? Are we in some unprecedented age of labor shortages, material delays, and geopolitical volatility? And why are these issues having such a particularly profound impact on our factory floors and dealership lots?
Why Auto Parts Are So Exposed
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Even if you own an American-built vehicle, it’s likely that several parts of it came from different countries across the globe. This intricate manufacturing network is known as the global supply chain.
Most major auto manufacturers rely on Just-In-Time (JIL) logistics with these parts, a system that appeared in Japan in the late 70s. The ultimate aim of this system is to reduce waste by receiving components just as they’re being put to use.
Unfortunately, if the timing is off, this system collapses.
Border closures, political tensions, and natural disasters have repeatedly shown us just how fragile the JIL system can be. With a sudden spike in demand for EVs, OEMs and suppliers now have to rethink an already volatile system to make way for unique performance car parts.
What’s Fueling the Breakdown
A Labor Force Running on Empty
The industry is just as short on people as it is on parts. A recent Global ABB survey found that 56% of North American automotive leaders cited labor shortages as one of their primary concerns. Dropping numbers isn’t the only issue. With advanced automation tools and electrification requirements, new roles require special skills that are in short supply.
The New Gold Standard – Semiconductors
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The global chip shortage hit automakers like a ton of bricks. Most modern vehicles, especially EVs, rely on microchips for power management, infotainment, fuel injection adjustments, and more. When COVID-19 drove the demand for consumer electronics sky-high, automakers were left scrambling. Some still are.
The average price for a new car in 2025 is around $48,699, and semiconductors have contributed to the higher cost. Even the aftermarket took a hit. Fewer chips mean fewer replacement parts, slowing down everything from BMW infotainment systems to Toyota struts.
Geopolitical Issues
Trade wars, tariffs, and global tensions have had a major impact on several markets, including the auto parts industry. In early 2024, Volvo and Tesla had to suspend production due to the Red Sea Crisis. Now, ongoing tensions between China and the West threaten supply cutoffs for rare earth metals necessary for production.
The Real-World Fallout
The question is now whether or not we start to view production delays as the new normal. When parts show up late (or not at all), manufacturers can’t meet their production targets. Some OEMs have to suspend their entire assembly lines. The news is just as grim for aftermarket suppliers, who often lose customers and revenue as a consequence.
Even Ford Motor Co. has tried to overcorrect by stockpiling parts, which is a dangerous high-wire act to perform between having too much inventory and not enough.
Unfortunately, the threat of price inflation is a reality, and everything from raw materials to shipping costs is higher than ever. Smaller suppliers without deep pockets are struggling to stay afloat, and those who can’t adapt are being edged out of the market.
How the Auto Parts Industry Is Managing
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While the global supply chain is under pressure, it doesn’t mean the auto parts industry is at a standstill.
Some automakers are leaning harder on third-party distributors and contract manufacturers for better cross-market visibility. Companies like Jabil, Avnet, and Flex are taking more hands-on roles to assess and manage incoming inventory, recommend alternate suppliers, and flag potential weak points.
Helping OEMs rethink how they source and stock critical components in creating a more resilient supply chain.
Broader Electronics Monitoring
If the chip shortage taught the industry anything, it’s that risk isn’t just the result of headline parts like semiconductors. While OEMs work closely with large IC producers like TSMC and STMicroelectronics, these relationships are only a small piece of the puzzle.
Older analog integrated circuits (aka “Legacy Chips”) found in old combustion engines are still crucial to the manufacturing process. These are just one of more than 400 sub-commodities sourced from hundreds of suppliers worldwide.
Auto manufacturers now know they need visibility beyond the most obvious choke points, as overlooking any small component could be just as devastating as a lost microchip.
The Road Ahead
The global supply chain has exposed several vulnerabilities in the auto parts industry, and it’s now up to OEM leaders to explore new modes of operation. There’s no going back to “business as usual.”
The hope is that new tech adoption, strategic partnerships, and better risk planning help automakers and suppliers build stronger systems that can withstand sudden changes.