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Automakers at Risk of Auto Parts Shortage

Many suppliers lack capacity to handle rising vehicle sales


Auto Cars TransportationIf U.S. auto sales continue to surge, manufacturers could find themselves scrambling to find enough components to meet demand as soon as next year.

A survey of 100 auto parts suppliers conducted during August and September by industry research firm IRN found that more than a quarter were experiencing “difficulty meeting production expectations.” If U.S. auto sales exceed 16 million vehicles in 2014, the strain on suppliers could lead to auto part shortages, Automotive News notes.

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At that level of demand, 28% of suppliers indicated that they would be unable to produce enough parts to satisfy manufacturers. The report noted that Chrysler — owned by Italy’s Fiat (FIATY) — would be the U.S. automaker most exposed to possible supply chain problems.

Electronic components may be in the shortest supply next year, with 38% of electronic parts makers noting that they would not be able to meet demand if auto sales accelerate in 2014. 30% of chassis and suspension parts makers reported that they would also be unable to produce enough parts at that level of demand.

An IRN executive noted that the survey highlighted “maxed out” capacity in the industry. IRN noted that auto part inventories were likely to be “one of the top issues for the industry in 2014.”

In August, U.S. auto sales hit an annualized rate of 16.09 million vehicles, the highest sales pace since before the start of the financial crisis, with strong gains reported by General Motors (GM), Ford (F) and Chrysler.

Article printed from InvestorPlace Media,

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