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Technology is crucial in most industries to advance safety and efficiency. The automotive sector is an excellent example of how advanced technology transforms products and, thus, the world. Big data and analytics have become an integral part of it all. So, how exactly has the automotive industry taken advantage of analytics, especially with maintenance and predictive diagnostics? How can using it benefit manufacturers? Let’s find out…
How Did Big Data Analytics Emerge in the Automotive Industry?
Big data is a relatively new concept, but its modern adaptations originated in the 1960s. For example, in 1964, IBM introduced the System/360, offering processors 100 times more potent than their predecessors. This technology is primitive in retrospect, but it was an essential first step for data processing. In the 1970s and 1980s, tech companies improved this technology to include the automotive industry.
By the 1990s, automotive technology producers began using big data analytics for vehicles. For example, global positioning systems (GPS) became more prominent this decade. These devices allowed consumers to use navigation technology well-known in the U.S. military. Many luxury cars came with this feature installed to entice consumers.
While GPS devices are still prominent, big data has improved cars enough to where they can be self-reliant. Soon, automakers will remove GPS devices once autonomous vehicles become widespread. These vehicles know where they’re going and do not need a GPS for navigation.
What Role Does Big Data Analytics Play in Automotive Maintenance and Predictive Diagnostics?
The last two decades have seen incredible growth for big data and its role in the automotive industry. Automotive professionals have used advanced technology for maintenance and predictive diagnostics. Using data helps technicians know precisely what the problem is and the necessary methods for mitigation.
Automakers primarily take advantage of big data analytics through embedded sensors in their vehicles. These devices allow the manufacturers to track cars anywhere in the world and detect where the problems lie. With this information, the automaker can notify the consumer of issues, find trends and develop solutions for widespread problems. Then, they know what issues to correct for future models of the same vehicle.
What software and technologies do automotive professionals use? These examples demonstrate how industry experts use big data for predictive maintenance and predictive diagnostics.
Machine learning (ML) has become a critical part of the automotive industry because it solves complex problems and creates algorithms. For auto manufacturers, ML has helped technicians predict equipment failures.
For example, automakers use ML to analyze historical data from their vehicles. Their computers use sensor data to detect trends and see what abnormalities led to the issues. Therefore, manufacturers can catch what problems may arise when they see a particular pattern occurring in a vehicle.
Another use for ML is creating maintenance schedules for vehicles. Historical data indicate when owners of a particular model should bring their cars for routine maintenance. The algorithm is intelligent enough to combine the data with driver performance to alert when service is necessary for the vehicle.
Telematics is one of the earliest examples of big data in the automotive industry, and it’s become vital for car owners and fleet managers worldwide. Research shows about 80% of Class 8 trucks in North America use telematics for safety and efficiency.
Telematics is essential for maintenance because it monitors vehicle health. These devices often detect problems earlier than the operator can, allowing companies to act swiftly on their machines. Early detection and mitigation save money and improve safety by not putting drivers in harmful situations.
What Are the Benefits of Big Data in Automobiles?
Big data analytics is a win-win for manufacturers and consumers. All parties can have peace of mind knowing their machines are safe and efficient. The following three benefits demonstrate how automotive professionals benefit from big data.
Cars are essential for daily travel, but they can be dangerous. The National Highway Traffic and Safety Administration (NHTSA) says nearly 43,000 people died in motor vehicle traffic crashes in 2022. Reasons for accidents vary, but they can originate from fixable mechanical failures.
Big data analytics decreases the likelihood of these failures by scheduling preventive maintenance and alerting when serious problems arise. Users can know if their brakes, steering wheel or battery needs attention before a catastrophe happens.
Big data analytics has become invaluable for fleet managers worldwide. The average fleet manager may have 10, 100 or 1,000 vehicles under their wing, making it difficult to track all of them simultaneously. However, advanced data allows them to monitor all the cars and detect trends.
Warning systems send information to the fleet manager, allowing them to act immediately. The modern supply chain demands maximum productivity from fleets, so taking advantage of big data analytics is essential.
Sustainability has become a significant focus for auto manufacturers. The push for more renewable energy and less waste has led to innovation across the industry. How are they achieving sustainability standards? Big data analytics is helping automakers care for the environment.
Using big data analytics extends the life of cars and reduces the need for customers to consume resources by purchasing cars. Instead, they can keep the same vehicle longer and spend less time at the mechanic.
When cars reach their end of life, many head to the scrapyard. While recycling has improved, parts and pieces still go to waste. For example, the European Union scrapped 5.4 million passenger cars in 2020. Installing telematics devices and using big data would extend their time on the road and reduce waste.
Big Data Analytics in the Automotive Industry
Automotive technology has come a long way and only improves yearly. Modern software allows auto manufacturers to utilize big data analytics with maintenance and predictive diagnostics. With this technology, manufacturers lower the cost for themselves and consumers and make their processes more efficient.
*This article is written by Jack Shaw. Jack is a seasoned automotive industry writer with over six years of experience. As the senior writer for Modded, he combines his passion for vehicles, manufacturing and technology with his expertise to deliver engaging content that resonates with enthusiasts worldwide.
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Strikes have been in the headlines lately, with the writers’ strike bringing Hollywood to a standstill and President Biden making history as the first sitting president to ever walk a picket line (he did it in Michigan in support of the United Auto Workers strike), and most recently healthcare workers are threatening to walk out as well. The average Joe is certainly impacted by these disputes between management and workers. The writers’ strike, which was recently resolved, means no new scripted programming this fall season (say it ain’t so, Law & Order!). The auto workers’ strike means new car prices are expected to rise… as if inflation and interest rates hadn’t handled that already. And a nurses’ strike will certainly impact the care people receive.
So, it’s easy to see how everyday people are affected by strikes. How do labor strikes impact the business side of the manufacturing industry? They can wreak havoc in many facets of operations, obviously bringing production to a screeching halt during the strike itself.
But those effects, and others, can linger when employees exchange the picket line for the production line, impacting operations long after the strike is resolved. Here’s how.
Decreased output. Obviously, production is brought to a stand-still during the strike itself. So, when employees get back on the job, the entire operation is behind. It affects everything from hitting forecasted numbers to earning revenue.
Inventory snags. Other parts of the industry, like the supply chain, can be unaffected by a strike, so inventory can accumulate. Getting inventory just right is a core principle for efficiency, and it’s a delicate balancing act between too much and not enough. Strikes can throw that balance off in a big way.
Delivery delays. Product isn’t being produced during a strike, period, so obviously it’s not going to be delivered on time. But even after the strike is over, delays can continue as companies play catchup. Those delays and shortages have a ripple effect, first hitting your partners and clients, but then rippling out to their partners and clients.
Damaged relationships. Employee morale is like gold in any industry, but after a strike, especially if it’s a prolonged one, relations between employees and management can sink to an all-time low. Distrust of higher-ups can seep onto the production line, disputes may not be completely resolved to both parties’ satisfaction, collaboration can suffer. With the battle for qualified, experienced workers in manufacturing, this is a tough setback.
Bottom-line woes. All of those production delays can result in fewer orders, distrust among your clients and vendors, stock prices could even take a tumble. All of it will eat away at your profits.
How manufacturing can bounce back after strikes
When the negotiation is done and the workers are back on the job, management’s next steps can mean the difference between bouncing back quickly from a strike or feeling those nagging, lingering effects. At USC Consulting Group, we’re the experts in helping management streamline operations, become more efficient, create effective training and more — all crucial elements in the next steps after a strike.
Careful scheduling to increase production. This doesn’t mean piling on the work to make up for the shortfall. But it might mean adding additional shifts, giving people extra hours or even hiring temporary help to close that gap.
A laser focus on employee relations. Now is the time for the C-suite to get out on the production line, if they haven’t already been walking that floor. Employee relations can be at an all-time low after a strike, so it’s vital to focus on employee retention efforts, additional training and other methods to make your employees feel valued and needed.
Involve employees in the fix. Items may have been hammered out at the negotiation table, but it doesn’t mean all employees will be on board with what the union agrees to. The old adage, if it ain’t broke, don’t fix it, applies here, only in reverse. It was “broke.” Involving the people on the front lines in the “fix” in terms of streamlining operations can go a long way.
Strive for operational excellence. This means efficiency and ease all the way down the line. When your shop is running on all cylinders, it’s not just good for your company’s bottom line. Employees like their jobs better when snags, delays and other frustrations aren’t happening.
Have labor strikes affected your manufacturing operations? Need some help improving your processes to please your employees and bottom line? Contact us today and we will walk you through the steps.
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The automotive manufacturing industry has been traveling a strange and bumpy road over the past couple of years. The pandemic created a traffic jam in the supply chain. At the same time, demand for new cars dried up. Who was driving? Everyone was at home during the lockdown. And on the heels of that, interest in electric vehicles began to surge. According to research by the International Energy Association, the demand for EVs is expected to rise 35% by the end of 2023 after a record-breaking 2022.
What did it all mean for auto manufacturers? Demand for traditional vehicles lowered as demand for electric vehicles grew, forcing auto manufacturers to do a delicate dance of balancing the type of production they’ve always done with the new processes and systems needed to produce EVs. The moving target of demand coupled with shaky supply brought about inventory uncertainty — how much was enough, but not too much? And then, there was (and continues to be) the labor shortage, with seasoned workers retiring and younger ones not exactly flooding through the doors.
Improving processes is paramount for the automotive manufacturing industry now. Here are a few ways you can do that:
Lean Six Sigma. If there ever was a need for auto manufacturing process improvements like the ones Lean Six Sigma can produce, it’s now. LSS is the blending of two efficiency methodologies, Lean and Six Sigma. It’s a bit ironic, because the Lean methodology, which focuses on efficiency and eliminating waste, was developed back in the day by Henry Ford… or at Toyota, depending on who you ask. It got its start on the auto manufacturing line, with the intent of eliminating the “seven deadly wastes”: overproduction, waiting, transporting, processing, inventory, excess motion and defects. At USC Consulting Group, we’ve added an eighth waste. People. Specifically, not using them to their fullest, not seeing untapped potential in great workers, and not training and developing people to rise through the ranks. Lean is about eliminating waste to produce more product quickly and efficiently.
Six Sigma, the other side of the Lean coin, is about quality control. Minimizing flaws and defects. But it’s deeper than that, rooted in data. The goal is to improve cycle time while eliminating or reducing defects.
SIOP. It’s difficult to achieve careful, accurate planning for the future when the road ahead contains so many bumps. That’s why we take the usual sales and operations planning (S&OP) process to a different level by adding inventory to the mix. The goal is to look ahead, anticipating the inventory you need while also coordinating with sales, marketing, and finance to involve the entire organization in this process. A key to SIOP is using inventory as a strategic tool to help offset variation in either demand or production issues.
Predictive Maintenance. Yes, it sounds extremely basic, but we find that heading off trouble before it starts can eliminate the risk of bogging down your entire production line to fix what’s broken.
Skills Training. Investing in training is playing the long game, but in light of your best people on the line retiring and fewer people to take their place, it’s paramount. Training has advantages in addition to the obvious — your people being more skilled on the job. It also demonstrates in a very tangible way that you are committed to the growth and success of your employees. You gain loyal workers and create a pipeline for advancement. It’s a win-win.
Technology Investments. USC Consulting Group is not about coming in and asking manufacturers to invest in the latest and greatest technology in order to become more efficient. No, efficiency takes harder work than just installing a new machine. However, in some cases, it’s necessary to level up. Legacy technologies don’t have the same features and capabilities as newer models. And in the auto manufacturing industry, you’re dealing with producing an entirely new product with electric vehicles. It may be time to look at your technology and decide if it can take you into the future or keep you in the past.
Doing business in the automotive manufacturing industry is like driving a manual transmission. You are constantly shifting gears to keep pace with traffic – in this case, the consistent change of consumer demand. Operations consulting helps companies improve their processes and be prepared for what’s coming down the road. We help manufacturers become more efficient and profitable in this or any economy.
Is working with operations consultants an untraveled road for you? Please get in touch. We’d love to talk with you about it.
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When looking into the trends for the automotive industry, there’s really only one headline. Electric vehicles. EVs are no longer “the future” of the industry. The future is now. It means many changes for the automotive industry, including changing demand, supply chain and inventory (which are all connected) and workforce challenges, in addition to the specter of new facilities to handle new assembly lines. For auto manufacturers, it means a heightened focus on efficiency, which we at USC Consulting Group are all about.
Electric vehicles (EVs) aren’t dominating the market. Yet. But they’re on the road there. According to research by the International Energy Association, the demand for electric vehicles is surging and is expected to rise 35% by the end of 2023 after a record-breaking 2022.
“Surge” is a good term for it, but “tsunami” might be even better. The EV market share in the worldwide automotive industry was hovering at around 4% in 2020, jumped to 14% in 2022 and will hit 18% by the end of 2023. It shows no signs of slowing down. By 2030, the EV market share is projected to rise to 60% in the U.S. and the EU.
It feels like we’re on the cusp of a great societal change with the surging EV market, the likes of which we’ve seen during the first and second industrial revolutions, the dawn of the internet and the day, back in 2007, when Steve Jobs stood on a stage in front of the world and introduced Apple’s new invention, the iPhone.
Yes, society will be impacted, but perhaps no sector more than auto manufacturers. It means great changes in demand, new challenges with supply chain and inventory, the urgent need for increased employee education, expertise and training, and changes on the line. It’s a whole new world out there for auto manufacturers, from the C-suite to inventory management to the production line, even extending to the dealerships.
How EVs are impacting automotive manufacturers
Here’s a look at the ways EVs are impacting the auto industry today, and how USC can help.
A good analogy for what’s happening in auto manufacturing right now in regard to changing demand is what we saw in the food processing industry during the pandemic. If a company was mainly supplying produce to restaurants, its entire market dried up when the restaurant industry was shuttered. Many processors shifted and began supplying grocery stores — two very different markets. Companies that were agile, lean and light on their feet (so to speak) were able to shift quickly in response to the shifting demand. So, too, with automotive today. Demand for traditional cars is lessening as demand for EVs is rising. It requires auto manufacturers to do a delicate “just in time” dance, which also involves supply chain and inventory.
For more info on how to roll with changing demand, read our eBook, Strategies for Meeting Increasing Customer Demand.
To state the obvious, EVs require different components, technologies and parts than traditional cars. Batteries, electric motors and other types of electronics, to name a few. On a higher level for auto manufacturers, it means developing new relationships that may be outside of the current supply chain, including battery manufacturers, those who deal with raw materials and microchips, and more. Supply chain woes that began during the pandemic are still bedeviling manufacturing operations in many industries, including automotive. New and unforeseen snags in the supply chain are sure to pop up as well. Solidifying while also diversifying your supply chain, with an eye toward reshoring, is critical.
With shifting demand and supply chain challenges, this is an especially tricky time for the auto industry, inventory managers especially. It’s important to focus on inventory and output, ensuring a balance between too much and too little. To wrangle all of these issues, demand, supply and inventory, savvy auto manufacturers are employing a methodology we call SIOP: sales, inventory and operations planning.
S&OP is a time-tested business management process that involves sales forecast reports, planning for demand and supply, and other factors. The goal is to help companies get a better, more clear look at their operations and create better-informed strategy decisions, allowing them to deliver what clients need in the most profitable way. We’ve found a lot of our clients do not include inventory as a strategic tool in their S&OP process. Therefore, they leave the “I” out of SIOP. That’s a mistake, especially now for auto manufacturers. The key to SIOP is to emphasize inventory as a strategic tool to help offset variation in demand or production issues.
To find out more about SIOP, download our free eBook: “Sales, Inventory & Operations Planning: It’s About Time.”
Ramping up EV production or even transitioning to EVs is going to require a lot from your workforce. In some cases, your best people who have been on the production lines for their entire careers will start to feel obsolete. It means reskilling and retraining of your current people, and hiring workers with expertise in EV technology.
As the demand for EVs grows, the production line will need to grow with it, shifting from traditional engine vehicles (combustion) to the kind of specialized production that EVs require. It may mean new facilities and new technology.
All of these changes for the automotive industry require a sharp focus on efficiency to meet current demand and planning to gear up for future demand. If there was ever a time for Lean Six Sigma (a methodology involving less waste, greater efficiency and consistent quality) it’s now. Lean was developed back in the day for the auto industry, and it couldn’t be more pertinent today. At USC Consulting Group, we have decades of experience helping our clients navigate changing tides in their industries. To learn more about how we can help, contact us today.
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The automotive industry has faced many challenges since the first cars rolled out of factories in the 1800s. Automobiles have become an integral part of society as a means of transportation for people and goods.
Given the importance of vehicles, many automotive companies focus on research, development, and innovation to deliver the best products to customers.
Automobiles Are Getting Smarter
The future of automobiles involves offering additional smart technology and features. We’ve come a long way since the days of steam-powered cars. In those times, vehicles consisted of a seat with wheels powered by an engine. In contrast, today’s automotive companies are in a constant battle for the latest features.
Car manufacturers first removed the need to shift with automatic transmission, and then they removed the need for maps with GPS. Now, they’re working on removing the need for drivers to control cars.
With automakers hard at work developing self-driving cars, experts see future roads filled with cars that can drive themselves. Radar sensors and complex algorithms can help accomplish this.
Machine-learning technology plays a significant role in the safety and navigation of self-driving cars. It creates a map of the surrounding area based on sensors. Meanwhile, control features monitor other vehicles. The data powers the understanding of the surroundings.
Complex software could process the data to operate the vehicle. With this technology, the car knows the direction to take, how to steer, when to accelerate, and when to hit the brakes. In the future, automobiles will operate themselves, with vehicle occupants becoming mere passengers.
Development is expected to wane in 2023. However, companies continue to take steps toward this goal, albeit at a slower pace.
Not only are cars becoming smarter, but they are also more self-reliant. Companies are working on features to reduce vehicle maintenance. One example is regenerative braking.
Automobile brakes rely on tremendous force to stop the vehicle. Regenerative braking takes the excess kinetic energy that otherwise goes to waste and turns it into electricity. The motor then receives the electricity as power.
Mobile information integration is another factor. Many car owners frequently worry whether their vehicle is in good condition. Drivers do not want to take on a cross-border drive only to find something is wrong in the middle of the trip. Information integration could prevent that.
One future service possible through mobile integration information is preventive maintenance. With this, the car becomes capable of monitoring its own systems and doing self-diagnosis. It relays key information to the owner. As a result, car owners get an early warning about their vehicles’ operational performance and potential issues.
Another key feature of future cars is integration with technology. We live with smart technology everywhere. From computers to smartphones, we are a voice command away. Why not integrate cars into the mix?
Volvo has already taken a step toward this. Partnering with Google, the automotive company is planning to introduce features to allow car owners to use voice commands with their vehicles. Examples include the following:
- Turning the car on and off
- Controlling the heating and cooling systems
- Providing car information
Integrating technology could also mean making better use of time spent on the road. Most people equate their daily commute to lost time. That could change with the right technology. The goal is to deliver productivity apps in the car.
Future vehicles would allow owners to do the following on the road:
- Making calls
- Joining meetings
- Checking emails
- Work on presentations
What is lost in the commute could be brought back with the right technology integration. However, with all the new features and integration, the issue of privacy comes up. Customers expect personalization, but that means providing personal data. This means automotive companies must have safeguards in place to protect car owners’ personal information.
Meeting Customer Expectations
Modern customers have varying expectations, and there is no single vehicle that can meet all customer needs. Instead, car manufacturers offer a variety of options.
That has led to the development of crossover vehicles. The idea is to give people an in-between option. Need more space than a car without going with a truck? You can now choose from a wide range of crossover vehicle models.
Innovation Is the Mindset
Having an innovative mindset is the key to remaining competitive in the automotive industry. These new features improve customer experience. When people choose between cars, they typically go with one that offers the functions they need. Advanced technology could influence consumers’ choices of vehicles.
Either manufacturers disrupt the industry, or they will get disrupted. Everyone is trying to create the next best thing to offer the public. They should never stop innovating, not only in terms of car features and performance. Using new technology, manufacturers could develop new business models.
Traditional business models for automakers include vehicle sales, after-sales services, and financial services such as loans. Advancements in technology can improve these services. For instance, social media platforms create an opportunity for market research. These platforms can also be a channel for after-sales services.
Moreover, websites and apps can now process financial data. These processes are more accessible to customers through technology.
New business models are developed, too. Mobility as a service (MaaS) and cars as a platform are good examples. With MaaS, customers can book vehicles for specific tasks. Ride-sharing apps are an example of that, as they are starting to eliminate the need for some people to own a car. That does not mean doom for automakers; it presents an opportunity to adjust their focus instead.
Innovation provides flexibility for manufacturers. It allows automotive companies to be prepared for disruption, which can happen anytime.
Learning From the Past
As the recent COVID-19 pandemic has proven, the supply chain is highly vulnerable. One small change can cause a ripple effect, disrupting the entire chain. Costs tend to go up in that scenario, and it is the customer who pays for that.
The COVID-19 pandemic severely affected the entire global supply chain. All industries felt the consequences of shutdowns. According to studies, the auto industry was among the hardest hit. Study results showed that over 50% of the auto sector said the disruption to them was very significant. That was the highest proportion across all other industries in the survey.
The biggest supply chain issue that affected the automotive industry was the automotive microchip shortage. Semiconductors and computer chips are crucial in powering modern vehicles’ advanced features. The semiconductor shortage resulted in production almost grinding to a halt.
Automotive production processes have not yet fully recovered from these shortages. As a result, auto experts remain unsure about whether now is a good time to buy a car.
The silver lining is digitization. The pandemic accelerated automotive companies’ progress in adopting new technology. It helped them recover and develop new supply chain processes.
The pandemic was not the first disruption the auto industry experienced, and it surely will not be the last. Automakers should expect more to come, as future disruptions could come from their progress.
What the Future Holds for the Automotive Industry
It is interesting to see how individual vehicle ownership could become obsolete. The current popularity of ride-sharing apps and other MaaS platforms shows that many customers prefer this means of transportation. This is also why automakers are focusing on driverless technology.
That means innovation is turning the automotive industry away from its current business model. Instead of losing to new customer preferences, automotive companies are leaning toward these changes. In doing so, they remain in control. This flexibility could be a significant aspect of future innovations in the automotive industry.
* This article is written by Cedric Jackson. Cedric is a freelance writer who is passionate about internet marketing, automotive, travel, and the entertainment world.
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The automotive industry outlook shows it travelling down the road toward another challenging year. The global supply chain is still reeling from COVID-era issues resulting in slow manufacturing times. Reduced consumer demand for traditional vehicles is impacting the industry, and the gasoline crisis amid the Russia-Ukraine tensions is keeping people off the roads. Despite these challenges, there is great reason for positivity. Brighter skies are on the horizon.
One especially bright spot: Electric vehicles. EVs have taken the market by storm, with many manufacturers worldwide making pledges for increased production and utilization of this emerging technology. Along with that comes increased need for things like batteries and charging stations to support widespread EV use. It’s exciting to see the increased need for the infrastructure and tools required to go electric!
In this article — with information from The Economist Intelligence Unit’s (EIU) comprehensive Automotive Industry Outlook 2023 — we will highlight key trends to be aware of in the industry for the coming year.
As long as the tensions between Russia and Ukraine persist, gas prices and availability will remain a question mark — but it’s a trend that started long before those tensions erupted. It began with the COVID pandemic.
Beginning in March of 2020, demand for gas plummeted when the majority of the U.S. was put on forced isolation. People just weren’t commuting. The highways were like ghost towns. Midway through the pandemic, folks started wondering when was the last time they filled up their gas tanks. They might not have been able to remember, but the industry certainly did. It caused many of the oil refineries in the United States to stall or close their doors for good.
While refinery numbers are slowly creeping back up, challenges still exist. According to the Refinery Capacity Report from the U.S. Energy Information Administration (EIA), this past June saw a refining shortage of roughly one million barrels of oil a day compared to pre-pandemic numbers. Add that to the ongoing tensions in Eastern Europe, and the market has many questions to answer in regards to supply and refinement capabilities.
Supply chain shortages
While the global supply chain is rebounding from the unprecedented COVID-era delays, there is still work to be done and shortages of supply.
One of the most prominent concerns for the automotive industry is the status and availability of semiconductors. EIU anticipates that additional capacity for this essential piece of equipment won’t come until 2024 — and the shortages of essential minerals such as steel, aluminum, nickel and lithium won’t just impact the semiconductor market, but the production of EV batteries as well.
To combat this, many countries are taking action to increase local production and mineral extraction. The United States, for example, recently passed the CHIPS and Science Act of 2022. According to the White House briefing, the act will drastically increase domestic semiconductor research and production, and “strengthen American manufacturing, supply chains, and national security, and invest in research and development, science and technology (…) including nanotechnology, clean energy, quantum computing, and artificial intelligence.”
It remains to be seen if this can supplement the semiconductor shortage for 2023, but it is certainly a step in the right direction for future availability.
After a rise in both new and used vehicle prices in 2022, sales for traditional automobiles are set to decline in 2023. The reasons include a perfect storm of reduced commuting time for people who continue to work from home, continued high gas prices and the aforementioned supply chain issues and semiconductor shortages, which caused a massive increase in cost for both new and used vehicles. The result? People are putting off buying new vehicles as their cars sit in their garages. One of the biggest culprits is simply the rising prices of new cars. Consumers paid $3,462 more on average for a new vehicle in 2022 than the previous year.
Slowly but surely, as the supply chain issues are repairing and more supply enters the market, sales and prices are set to decrease in the upcoming year. The EIU predicts that new car sales will decrease by 2.4% in North America… but estimated global vehicle sales of $79 million will continue to fall short of the pre-pandemic $88 million in sales.
“The total EV investment among automotive suppliers and manufacturers is set to reach $526 billion between 2022 and 2026.“
The EV wave
The shining star of the automotive industry in 2023 and beyond is the continued production and implementation of electric vehicles and charging stations.
While electric vehicles only accounted for 8% of global sales in 2021, production and market share is set to explode to an estimated 33% of global sales by 2028, and as high as 54% in 2035, according to Reuters. Not only that, but the total EV investment among automotive suppliers and manufacturers is set to reach $526 billion between 2022 and 2026, nearly double the investment from the beginning of the decade.
The EIU confirms that optimism, predicting that the sales of electric vehicles will grow by roughly 25% in 2023, to almost 11 million units. The ongoing tax breaks and subsidies provided by countries around the world are seemingly propelling this growth, with more incentive now than ever to join the EV automotive revolution.
We can help to navigate uncertainty
While the automotive industry outlook is set for a challenging year in 2023, there is still light at the end of the tunnel for manufacturers to get back on track and capitalize on new trends.
At USC Consulting Group, we are always ready to help your organization stay on top of the automotive industry. Give us a call today to ensure successful operations in the upcoming year and the foreseeable future.
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It’s been a bumpy ride for the automotive industry this past year. Back in November and December when the economy was running full speed ahead, automotive manufacturers had high expectations for robust sales activity in 2020.
Then, COVID-19 happened.
With frightening speed, the economy ground to a halt as states, employers, and officials implemented various measures to slow the spread of the virus, which ultimately resulted in layoffs and reduced buying activity. In a typical year, the number of motor vehicles sold runs between 17 million and 20 million. But the sudden decline in car sales has analysts forecasting an overall light vehicle sales total of 14 million nationwide by this year’s conclusion, CNN reported. Perennial leaders in auto sales — such as General Motors, Ford and Chrysler — witnessed double-digit declines in quarterly sales compared to 2019. In response, automotive manufacturers slowed down output, a consequence of declining demand, assembly worker absences caused by COVID-19, and other supply chain disruptions.
Yet defying the odds, automakers appear to be back in the driver’s seat. As some of the coronavirus lockdowns and restrictions have lifted, the economy is in growth mode, with gross domestic product soaring at an annual rate of over 33% in the third quarter, according to the Bureau of Economic Analysis.
While car sales during this same period were lower than this time last year, they finished far better than experts anticipated, including Cox Automotive Senior Analyst Michelle Krebs.
“It’s coming in better than we thought,” Krebs told CNN.
Here’s the problem: Consumers may be back in a buying mood, but automakers still aren’t operating at peak capacity. As Car and Driver magazine reported this past summer, in response to the effects caused by the pandemic, numerous nameplates pushed the pause button on several all-new or upgraded product reveals. During the average year, the upcoming year’s car models start arriving on dealer lots in the late summer. In 2019, for example, 11% of motor vehicles available for purchase were 2020 models. Today, the latest models represent just 2%.
“Consumers may be back in a buying mood, but some automakers aren’t operating at peak capacity.”
“They’re just sort of behind,” Cox Automotive Senior Economist Charlie Chesbrough told Car and Driver. “The white-collar workers are behind in planning the model-year rollovers; the factories have had a difficult time getting the supply chain up to speed.”
The same is true for used and preowned automobiles. As Edmunds.com’s Jessica Caldwell pointed out in a press release, used vehicle parking lots had few to any buyers in them initially, but now, what was unsold is going fast.
The question becomes, then, what strategies and planning can automotive manufacturers implement to ramp up production so inventory issues don’t show up in 2021? The following recommendations may help:
Keep an ongoing maintenance schedule for equipment
While assembly workers is critical to increasing output, the equipment leveraged are the workhorses of auto manufacturer factories, increasing and streamlining production seamlessly. But when they’re not working or encounter repair issues, everything slows down. That’s why it’s important to adhere to a maintenance schedule so equipment is well lubricated and bolts are properly fastened. From semi-automated lifting machines to die gripper cranes, preventive maintenance is critical to avoiding issues that can prevent assembly teams from reaching their production goals in a timely manner.
Review current systems and processes
When it comes to solving problems, you first have to recognize exactly what those are and why they’re happening. When it comes to output for automakers, it’s really been a confluence of events brought on by the pandemic, economic instability that resulted and how manufacturers responded. However, with slight or significant tweaks on the factory floor, teams may be able to maximize how much they produce. By mapping current production processes, crews may be able to isolate where the problems exist and uncover bottlenecks. This type of review may all help identify potential bottlenecks so they can be resolved before they occur.
Consider developing new protocols to keep teams healthy
One of the issues that automotive manufacturers encountered throughout the pandemic was absenteeism. The virulence and contagiousness of COVID-19, the symptoms of which often are similar to influenza, led to fewer people on assembly lines, leaving others to pick up the slack. While most people fully recover from the illness, a lack of personnel naturally leads to a slowdown. Firms may want to think about installing measures that can help workers avoid the potential for becoming sick. Whether it’s daily health screenings like temperature checks, social distancing measures, personal protective equipment, or more regularly scheduled deep cleanings between shift changes, a healthy workplace is a productive workplace.
Perform investigation into more automation
Automation is already a standard part of many automakers’ production processes, given it helps to maximize output, reduce costs and virtually eliminate mistakes that result from human error. But as technology is in a constant state of advancement, there may be systems out there that are better than what you have now. None of this is to say you should invest in more automation, but smarter machines can not only increase the speed of output but improve quality control and give crews the ability to handle issues that automation can’t solve.
Using automation as a supplement to your personnel can help you identify quality control issues that they may miss. As IndustryWeek points out, numerous quality control studies tracing back to the 1970s show human inspectors find 80% of the defect in manufactured parts. Leveraging automation can pick up the difference to increase efficiency, consistency, and — above all else — productivity.
Just like a major motion picture is more than the actors on screen, an automobile is made up of thousands of pieces, parts, metals and components. A supplier is bound to encounter supply chain issues at some point. Instead of relying on one, aim to diversify them so if one is out of what you need, you can pivot to a supplier that has the items necessary. Strategic sourcing is a discipline that is crucial to ongoing supply chain management.
From throughput to quality improvements or supply chain optimization, USC Consulting Group can help your company resolve issues and rev up your operations using the right methodologies. Contact us today to learn more.
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The electric car industry has seen its fair share of bumps in the road. In 2008, Tesla introduced the world to the Tesla Roadster, the first all-electric vehicle to use lithium-ion battery cells. On a single charge, it could travel roughly 200 miles. A mere two years later, the Nissan Leaf debuted, another automobile that entirely ran on electricity and the added benefit of not producing tailpipe emissions — a win for the environment. It maintained a lengthy streak as the top-selling EV nationally and globally.
Fast forward to today, consumers have a litany of additional EVs to choose from, including — but not limited to — the Hyundai Kona, Chevrolet Bolt EV, Tesla S, Karma Revera, BMW i3, and Mitsubishi iMiev. The growth in options is largely due to the ever-advancing state of technological improvements combined with state-of-the-art innovation.
All this being said, the journey to growth for participating automakers has been bumpy, beset by slow sales, manufacturing complications, and production delays. The latest example: Tesla, which is encountering struggles in unveiling the auto industry’s first electric pickup truck.
When word first came down that the Palo Alto, California-based automaker was in the process of developing a pickup capable of running on electricity, CEO Elon Musk didn’t hold back, calling it quite possibly the “coolest car” he’d ever laid eyes on, according to The Mercury News, a statement he made back in 2018, the same year the yet-to-be-named model was scheduled to arrive in dealerships.
However, in a reply to a questioner on Twitter, which asked Tesla’s CEO when the EV pickup truck would debut, Musk tweeted, “November most likely,” and it may not even be ready by then, industry insiders say.
“Producing EVs can be highly labor intensive and expensive.”
While the automaker remains tightlipped about what’s caused the delay, it may have something to do with manufacturing and development, as the process of producing EVs can be highly labor intensive and expensive. It starts with mining, as in order to run off of electricity, EVs require a number of different rare earth minerals, such as cobalt, nickel, silver, aluminum as well as lithium, which is used for storage cultivation ion batteries. But the rarity of these minerals make them expensive to extract for the metals and mining industry, which manufacturers must pay for when using them in development. Additionally, according to the Institute of Sustainable Futures, the supply of these minerals could eventually run out under a 100% renewable energy scenario that’s laid out in the Paris Climate Agreement.
“Batteries for electric vehicles are the most significant driver of accelerated minerals demand,” researchers for the study concluded in their findings.
Encumbering environmental standards
Another obstacle for car manufacturers are environmental restrictions. In the mid-1970s, following the oil embargo that led to a run on gasoline, the United States Congress passed the Energy Policy and Conservation Act. Within this piece of legislation was the Corporate Average Fuel Economy, or CAFE, which was a set of emission standards manufacturers had to abide by to make fuel-powered automobiles more energy efficient. CAFE standards have been updated on a fairly regular basis since then, with the government requiring mass produced vehicles sold in the U.S. to achieve certain miles-per-gallon milestones. As noted in Encyclopedia Britannica, the CAFE standard in 1985 was 27.5 mpg, which remain unchanged for many years. But by 2013 during President Barack Obama’s administration, the standard was raised to 54.5 mpg, a minimum automakers at the time were expected to reach no later than 2025.
Some of these standards have since been curtailed, but the costs manufacturers spend to ensure their supply abides by government protocols are considerable. These expenses are often passed on to consumers when they buy from dealerships. Indeed, according to a 2016 study conducted by international management firm Arthur D. Little Global, operating a car that runs on electricity costs owners approximately 44% more over a 20-year period than a vehicle with a regular internal combustion engine. That’s the equivalent of more than $20,000. Additionally, the difference in spending is even greater — 66% more — when comparing mid-size battery electric vehicles to mid-size internal combustion engine vehicles.
Sales growth on the slow side
This is part of the reason why electric-vehicle sales have largely failed to live up to expectations in terms of sales. As noted by Edmunds.com, in 2011, President Obama projected 1 million electric vehicles would be on the nation’s roads no later than 2015. Not only was that total not reached by then, it wasn’t until 2016 that the world’s 1 millionth hit the roads, according to Clean Technica. Business Insider reported there are 2.2 million registered for operation in the U.S., based on 2018 figures, but that’s with buyers often taking advantage of government subsidies. On the world’s roads, the total is 5.6 million, according to estimates from the Centre for Solar Energy and Hydrogen Research, a Germany-based nonprofit.
Both of these figures are encouraging for automakers, in particular, and the car industry in general, but they aren’t as high as many expected them to be a decade ago. And as a percentage of all the vehicles sold in the U.S., EV represent roughly 1%, according to multiple reports.
“The average electric vehicle in the U.S. sells for around $55,350.”
The selling price of electric cars is partly to blame, which manufacturers ultimately set in order to turn some kind of a profit. Based on the most recent statistics available from vehicle valuation firm Kelley Blue Book, the average electric vehicle in the U.S. — as of August 2019 — sells for around $55,350. That’s more than $30,000 higher than the typical compact automobile and a price tag that’s $38,500 more than the average subcompact car.
Limited mileage per charge
Another issue that’s proving to be a sticking point for car manufacturers is determining how to build and develop EVs so that they run longer on a single charge. Take the Nissan Leaf as a classic example, which as previously mentioned was once the best-selling EV in the nation, a title which now belongs to the Tesla Model 3, according to The Driven. As Popular Mechanics reported at the time, the Nissan Leaf could course only about 80 miles before needing to be plugged in again. That was a few years ago, but today, most electric cars get just 100 miles for each charge, based on calculations from the Institute of Transportation Studies.
There are mainly miles to go before the electric vehicle’s fate is ultimately determined, and much of it depends on the process improvements that manufacturers can implement to make EVs more appealing to new-car buyers and cheaper to produce. Whether its asset utilization, cost efficiency or sales effectiveness, turn to USC Consulting Group for industry expertise. We can make the road smoother to drive growth and prosperity. Please contact us today to learn more.
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