How Covid is Affecting the Automobile Industry
Supply Chain Woes
We've been reading in the news and seeing firsthand the affects that Covid 19 and the global pandemic has had for us all. Clearly, 2021 saw the after effects of the 2020 pandemic in terms of increased wait times, shipping delays, port concerns, logistics, and ultimately, super inflated pricing.
Moving into 2022 it doesn't seem this trend is slowing down any. So, what do we as consumers need to do? First off, we probably need to take a big dose of reality and realize that we aren't going to get what we want quickly at a price that we have been accustomed to. No, today requires a specific kind of patience that America has not been accustomed to over the last several decades. We as consumers expect to get what we want quickly, at a reasonable or competitive price and in a lot of cases, delivered to our front doorsteps the next day.
In taking a deeper dive into the problems, it starts with the Pandemic itself. Major overseas suppliers, manufactures, transportation and distribution companies experienced the same problems that working class American families and businesses faced. Companies were faced with staff working from home, assembly lines that required human workers were halted and production numbers were reduced to meet the supply a limited workforce could deliver.
Global manufacturing giants like China, Taiwan, Vietnam, South Korea, Germany, and the United States were all affected similarly. When these global manufacturers lowered or reduced their production because the pandemic forced them to, shipping companies decreased their frequency of scheduled pickups and thus created the after effects of what we are all seeing and experiencing today.
Couple this with major ports now being overrun or backed up due to new increased production and shipping along with railways being inundated with shipping containers and transportation companies trying to play catch up, it's easy to see the side effects that us as business consumers are facing.
Now add in the increased labor shortages across the US and the increasingly inflated pricing, you can see how it all takes its toll. What used to cost $2,000 for a shipping container to come from overseas to the United States now costs $25,000. That is an increase of nearly 12 in a half times the typical standard cost. Because of this, it's no surprise that the ultimate consumer is having to make up that price in increased cost of goods.
How Has the Supply Chain Problems Affected the Automobile Industry?
If you haven't heard about this already, we would be surprised. The automobile industry has been affected in the similar way as everyday consumers have been. From microchip shortages out of Taiwan (Taiwan accounts for 51% of microchip manufacturing) to pre-owned inventory shortages across the country, car dealerships are running out of cars to sale. If they aren't low on car inventory, they are paying a large premium to obtain used cars at auction, and in some cases, paying well over market value on a trade in or the like.
A good example of this can also be seen in places like Detroit, where brand new 2021 vehicle makes and models have been waiting to be shipped out to new car dealerships across the US but unable to because of the microchip shortage. Now as those microchips come in, the 2022 models are being built on top of those 2021 in supply and ready to be distributed, all of which affects the cost, supply, and demand algorithms.
What Steps Has Quality Automotive Equipment & Service Taken Proactively to Protect its Customers?
As explained above, Quality AES has seen the same issues as all other businesses have in today's time. We are experiencing delayed wait times on goods, higher increases in costs from our manufacturers and in turn increased pricing for us to obtain equipment for our customers. These concerns, as challenging as they are, have been hedged a bit by Quality AES as we have tried to take a proactive approach to these supply chain woes.
Initially when we saw the increases in cost and the delay in delivery times, we decided to increase our on-hand inventory. From automotive lifts and air compressors to tire changers and shop equipment, Quality AES has tried to protect our customers from drastic price increases and more importantly, equipment that can easily be purchased, delivered, and installed by our technicians locally with limited wait times. Of course, this isn't the case on every piece of equipment that Quality Automotive offers, nor have we been able to keep some costs from going up but the goal for our customers is to keep our dealerships and independent shops running without having a service bay shut down due to waiting on technician needed equipment.
We hope that you aren't experiencing some of the major shipping delays and increased pricing like some of our competitors customers are. If you'd like to talk with one of our service providers, technicians, or sales team about your specific automotive equipment needs, give us a call at 913-205-1350 or send us a message here.