According to Xometry’s 2024 Automotive Manufacturing Industry Survey, the majority of leading automotive professionals are feeling optimistic about the future. As many as 68% of survey respondents, which include decision-makers and industry experts, said they expect their company to grow in 2024.
As well as market growth, automotive companies must navigate worker shortages, pressure to scale up EV production, the steady rise of autonomous vehicles, and the challenges that come with managing complex, international supply chains.
With these challenges in mind, what are the top automotive supply chain and procurement trends for 2024?
6 Automotive Supply Chain Trends For 2024
From higher wages to a renewed focus on supply chain transparency, these are the top six supply chain trends for the automotive industry in 2024.
1. Higher Wages for Workers
The 2023 United Auto Workers (UAW) strike took action against all three of the unionized automakers — Ford Motor Company, General Motors, and Stellantis — for the first time in UAW’s history. From mid-September until the end of October, strikers protested stagnant wages, poor compensation for new employees, and the loss of overtime and retirement benefits.
Ongoing worker dissatisfaction, coupled with the automotive industry’s need to hire skilled technical workers, is making it harder for companies to attract and retain employees. Indeed, 56% of Xometry survey respondents admitted that they were struggling to find qualified workers.
In addition, as much as 67% of the automotive manufacturing sector surveyed reports that their company will increase worker wages within the next 12 months, most likely in the hope of curbing high attrition rates.
2. A Rise in Reshoring
Already, 66% of the automotive sector sources at least half of its products or raw materials domestically, while 80% sources at least half of its services domestically.
In 2024, reshoring is expected to increase, with 44% of survey respondents saying they are “very likely” or “extremely likely” to onboard new North American products or raw materials suppliers in the coming months. A sizable 75% said they plan to add North American service suppliers.
The driving factors behind reshoring initiatives are supply chain fulfillment, government grants, access to better-quality American-made products and materials, reduced shipping costs, increased supplier responsiveness, and the desire for ISO-certified suppliers.
Any hesitancy towards reshoring is largely due to higher costs, which is the top factor automotive manufacturers consider when choosing a new manufacturing partner. A lack of skilled workers, component and raw materials shortages, and slow lead times are additional concerns. At present, less than half of the North American automotive industry Is manufacturing products that are in short supply.
3. Increased Supply Chain Transparency
Though the majority of automotive manufacturing professionals are satisfied with the level of transparency and traceability in their supply chains, companies are conscious that there is always room for improvement. This is especially true for the 29% of survey respondents who consider the level of transparency and traceability within their supply chains to be “below average” or “extremely poor.”
In 2024, more automakers will take decisive action to improve supply chain visibility, installing new software, leveraging blockchain technology, and enhancing their supplier relationship management (SRM) strategies.
4. Electric Vehicle (EV) Investments
Investments in EV manufacturing will continue to grow, driven by growing customer demand, government incentives, and increased affordability.
Although 84% of survey respondents agree that it is difficult to bridge the gap between their current status of EV innovation and the Biden Administration’s 2024 goals, auto industry executives are generally optimistic about the future of EVs.
Respondents cite battery innovation, charger compatibility, and the nation’s poor electrical infrastructure as the top obstacles to larger-scale EV production.
5. Sustainability Investments
The automotive sector is facing increased pressure from governments and consumers to drive sustainable business practices.
Over the next 12 months, companies will look to overhaul their manufacturing operations and develop more sustainable vehicles.
Sustainability initiatives will also impact the sourcing of raw materials and components and logistics and shipping processes.
6. AI Investments
Xometry’s survey found that 40% of auto-makers are not yet using artificial intelligence (AI) to enhance their customers’ driving experience, which can be explained by the lack of public confidence, conflicting legislation for self-driving vehicles, and immature technology.
Within the automotive supply chain, however, AI solutions are proving invaluable. Indeed, 76% of companies are deploying AI in supply chain management and 71% are deploying AI in procurement. As many as 70% of survey respondents said they had seen an immediate return on investment in AI.
Those yet to embrace AI within their operations are aware of its benefits with regard to spurring innovation, lowering costs, improving driver experiences and safety, increasing predictive maintenance, and identifying additional domestic suppliers. With this in mind, it’s safe to assume that AI investments will increase in 2024.
