The COVID-19 pandemic was only the beginning of incredible supply chain issues in the automotive industry. No one could have predicted these problems.

From suppliers shutting down to mining operations facing challenges in poor areas of the world to the semiconductor chip shortage, automakers have faced incredible challenges. These problems have created inventory shortages across the board, leaving car dealers to sell used cars at higher-than-average prices and new cars at even higher prices. Some new cars have become so scarce that customers must agree to wait for their desired model, and that wait isn’t only a few days.

Let’s look at five of the top supply chain challenges in the automotive industry.

1. Many automakers moved to just-in-time processes

When the supply chain is flowing normally, a just-in-time production process works great. This process ensures necessary materials aren’t left sitting on shelves, leaving potential profit on the side. Unfortunately, those automakers that have turned to this production process are now facing serious challenges in their chain of materials. Instead of having items when they need them, many are building cars that are unfinished and completing them later.

The lack of one or more parts caused many manufacturers to have vehicles ready for that singular part when it arrives. Stories surfaced over the past few years of a parking lot filled with Ford Broncos or Chevy Silverado as some of the largest car names in the United States waited for semiconductor chips. In some cases, automakers sold vehicles without some of the latest passive safety features to allow the sales funnel to flow. The just-in-time production process contributed to the troubles with the supply chain in the automotive industry.

2. Reputations are more important than ever

Vehicle recalls are becoming much more commonplace than they were in the past few decades. The use of more computers, programming, and advanced technology means vehicles we drive today have more potential for problems than those of the past. With this in mind, we must remember that reliability in today’s auto market isn’t the same as reliability in the 1960s when it wasn’t odd to see a person hitchhiking down the road because their vehicle stalled and they couldn’t get going again.

Even with more reliable vehicles, consumer expectations’ of today’s vehicles are at an all-time high. This, coupled with the instant sharing of information via social media, makes it more important than ever that automakers employ accurate and comprehensive quality control initiatives. Recalls can lead to more than just a bad reputation online though. These recalls can lead to lost revenue and material waste when the problem being corrected requires a dealer service center to perform repairs at the cost of the automaker.

3. Communication and visibility must improve

Some automakers have already seen this as a troublesome area of their supply chain process. The automotive industry uses one of the most advanced supply chains, which means it takes everyone working together to get nearly 30,000 parts together to build most vehicles. Whenever any aspect of this process is disrupted, vehicles aren’t built and won’t make it to dealerships where they can be sold to the next customer through the door. In order to strengthen this aspect of the process, communication and visibility are a must.

The required visibility must move all the way down the line to the suppliers that send the parts to various plants around the world. The more automakers can use consistent parts across vehicles, the easier the supply process becomes. This is part of why many companies began to transition toward global platforms that can be used across several vehicles. The movement toward electric vehicles also means the chain will eventually require fewer parts, but right now, there are two sides to this supply chain; parts for ICE models and parts for EVs, which makes it even more of a challenge than before.

4. Automakers must protect the environment

It’s not a generational thing, as many feels but being aware and working to protect the environment is an important part of moving the automotive industry forward. Many companies have already begun their sustainability efforts to reduce their carbon footprints. This is an important part of moving forward, especially considering the processes required to build the lithium-ion batteries of modern electric vehicles.

No automaker want’s to be put in the news, even social media news because their manufacturing processes aren’t more sustainable than before. Many companies have employed new processes and built new plants to ensure the entire manufacturing process is a carbon-neutral endeavor. This requirement has altered the supply chain in the automotive industry for the better. Some automakers are also looking into ways to recycle or reuse their EV batteries once they’ve lived out their lives in the EVs. This is a huge challenge in this part of the auto market.

5. The COVID-19 impact continues to loom large

The movement away from the pandemic has been extremely slow, but it’s also been significant. The first challenge that rose its ugly head was the shortage of semiconductor chips. Of course, when the world was shut down and companies slowly allowed employees to return to work, this also meant car shoppers headed to dealerships. The supply of new vehicles had all but stopped, and orders for semiconductors were canceled. This created a serious problem in the supply chain of the automotive industry that has yet to be completely fixed.

Today, we’re in 2023 and nearly three years away from the pandemic striking the globe. Some automakers have found ways to push more vehicles to dealers than in the past couple of years which translates to used car prices dropping from where they were. It’s likely we’ll still feel the impact of the pandemic for at least one more year, and some automakers aren’t willing to replenish dealer stock to pre-pandemic levels. Hopefully, we won’t see another global challenge that limits the supply chain for this or any other industry.