According to the Q4 2021 OESA Automotive Supplier Barometer Index (SBI)—a gauge to measure the sentiments of North American automotive supplier executives—continued disruption to the automotive supply chain from input shortages, and the subsequent shutdowns of numerous OEM production facilities, weighs heavily on the sentiment of supplier executives despite strong U.S. demand for light vehicles. Net results indicate a sharply lower reading of 34, an 18-point decline from the third quarter reading of 52, and 16 points below a neutral reading of 50.
The Q4 2021 OESA Automotive Supplier BarometerTM, sponsored by RSM US LLP, focused on Capital Markets and Innovation. The results indicate:
- Production shutdowns stemming from supply chain shortages and issues, labor availability and the inability to fulfill customer volumes, continue to be top threats to the industry over the next 12-months and have worsened over the past quarter. Supplier confidence in the strength of the U.S. economy has also wavered as issues related to the pandemic have continued longer than expected.
- Production breakeven estimates exceed actual production levels for a second consecutive year, suggesting two sequential years of net losses for the supply base.
- Terms of commercial loans and credit lines are expected to continue to tighten over the coming year. While confidence in capital acquisition remains at strong levels, suppliers are less confident they will be able to access their needed capital in comparison to 2020.
- Thirty-eight percent of suppliers believe they are ahead of the industry’s pace of innovation while twenty-eight percent feel they are behind. Focusing on partnerships, technological R&D, diversification and developing products and solutions that support the EV market are common practices by firms that consider themselves the most innovative.
“Leading firms continue to navigate pervasive supply chain constraints with a focus on teams and technology to improve visibility and manage through the current crises to lift competitiveness and build a stronger position in the market recovery,” said Mike Jackson, executive director, strategy and research, OESA. “Despite year over year profit pressures, suppliers continue to display remarkable tenacity by disrupting past practices to uncover new solutions and address opportunities across the mobility landscape – through a renewed focus on software competency and a vital commitment to harnessing innovation,” Jackson said.
