What’s shaping the Auto Parts Industry

When our car starts to act up, what do we normally do? After using a variety of “creative” words and language, we look into replacing the auto parts.

The auto parts industry is one of the great unsung titans of the national economy. From the people who manufacture them to the guys that sell them, it’s a miracle for the average motorist.

We’ve all stumbled into AutoZone, Pep Boys, or some local store, trying to fix our immediate car troubles. Luckily, there’s a person who can explain why what we’re about to buy is a terrible choice.

Yet with all the hoopla, where does the industry stand at the moment? Do producers and sellers have a strong competitive advantage in the grand scheme of things? Let’s take a look at where auto parts manufacturers are heading.

Don’t immediately panic!

US automotive sales have jumped all over the place since the pandemic. Higher interest rates and prices have also kept some interested buyers out of the market as would-be customers choose to hold onto their old cars for another few years when possible. There is good news, however. For July 2023, new-vehicle sales likely came in near 1.30 million, an increase of more than 15% compared to year-ago levels.

Even so, it is likely that a slowdown in sales could occur for the latter half of the year because of financial pressures. It is impossible to predict the future, especially in the current economic climate, but there is still hope for auto parts manufacturers. 

No matter how auto sales perform in the coming months, auto parts manufacturers can find a way to use the current market to their advantage.

Older cars mean bigger needs and more money

With many hanging onto their older cars rather than buying something new, there’s a net benefit.

People will need auto parts to service their vehicles going forward.

A lot of producers and sellers maintain a general inventory of items for older vehicles. The reality is that the older the car, the more likely they’ll have to invest more to keep it going.

Older parts and items may still command higher prices because of demand. The limited quantities of parts or lack of availability may also contribute to these increases.

Similarly, manufacturers may also be compelled to resume production of a discontinued item if the demand is there. This of course requires additional labor and skilled individuals on both ends of the field.

So if you’re in auto parts, you can greatly benefit from all the old clunkers on the road.

How an ERP can Help

If you are an auto parts manufacturer, an Enterprise Resource Planning (ERP) system can allow you to make intelligent, data-based decisions about how to navigate the current market. By working with a one-stop shop like Datix, you can ensure that you use the right software solution to meet your business needs.

For instance, deciding to resume production on a discontinued item is a big decision with a lot of potential risk. To determine if demand is truly there for a discontinued product, forecasting is key. Modern ERP solutions can offer accurate forecasting so that you can decide if it makes sense to restart an old product, or if you should invest your production time into your existing or upcoming items. In addition, pricing and quoting calculators that factor in the most up-to-date cost of raw materials will allow you to offer the most competitive prices for your orders.

Whether you produce or sell them, auto part manufacturers have a thriving future ahead of them if they invest in the right ERP technology. Talk to our team at Datix to gain a business-first approach to tailoring your ERP ecosystem.

Wrap Up

While the auto industry itself is in a complicated period, the outcome for parts won’t be so pessimistic.

With changing markets and an older domestic car fleet that requires parts, you’re in the prime position for growth. Rather than being worried, consider if those 2010 or 11’ parts in stock might be golden eggs.

Take advantage of market trends with ERP

About Datix

With over two decades in the industry, Datix is the ERP consultant of choice for manufacturers and distributors. We believe in “being the best with the best” and look for partners who match our commitment to solving real issues and doing what it takes. Our in-depth analysis of our clients and their business needs allows us to maximize their software investments to the fullest.

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