It looks as though the tide is turning for the automotive industry.
A new study released last week by A.T. Kearney paints a rosy picture for the future, forecasting:
13.2 million new autos will be sold in the US this year and
an upward trend toward pre-recession levels of about 16 million units by 2013.
According to the study, over the past four years, total new and used pent-up demand has accumulated to 32 million units, of which more than nine million will materialize in the new vehicle market over the next five to seven years. The remaining 23 million units will sell in the used-car market.
But, as A.T. Kearney is quick to point out, there are a handful of significant variables that could, potentially, change these projections. This list includes:
overall economic growth
credit availability (The recession created 15 million "new sub-prime consumers," of which approximately 530,000 customers would be locked out of the new vehicle market without help from auto lenders.)
parts shortages in the aftermath of the earthquake and tsunami in Japan
What can OEMs and suppliers do to prepare for the anticipated upswing in sales even as they accept the possibility of market volatility? A.T. Kearney suggests that OEMs and suppliers:
Proactively manage supply capacity risks. A.T. Kearney found that OEMs had a good understanding of the risks associated with their first-tier suppliers, but focused primarily upon financial and operational risks. Social/reputational, natural hazard and economic risks were not as well understood, and the OEMs had only a limited understanding of the lower tiers.
Focus on procurement. CPOs must now manage an increasing number of factors, including fluctuating consumer demand, capacity constraints with lower tier suppliers and commodity price volatility.
Continue quality improvement. Stress test quality systems and learn from competitors recalls.
Employ advanced analytics to better anticipate needs in a volatile market. Today's analytic tools can help OEMs track competitor activity, risk factors, real-time national demand and inventory levels.