Source: Kalea Hall, The Detroit News
John Sellek of Brighton, Michigan, remains carless two months after his 2015 GMC Acadia was T-boned, causing thousands of dollars in extensive damage to the driver’s side.
Sellek, founder of Harbor Strategic Public Affairs firm, has been using rentals since that Oct. 28 crash. He treks to Lansing, Michigan, from Brighton for work and needs a vehicle, but the rental insurance is now up. Instead of forking over hundreds of dollars every week, Sellek and his wife have decided to share a vehicle for now.
“I never could have imagined that this would go on so long that my insurance would actually run out,” he said.
Accidents happen. But when they happen these days, it’s taking weeks to months for collision shops and dealers to get the parts they need to fix the vehicle, leaving customers like Sellek without the wheels they need. The wait is yet another example of how the pandemic has thrown a wrench in the supply chain system and forced repair shops and parts distributors to get creative with temporary fixes and find new vendors to help customers get back on the road.
“It’s been incredibly eye opening because we all know about the supply chain problems around the world,” Sellek said. “We know that there’s no chicken at Meijer some days. We know that when I ordered something from IKEA it took literally five months for it to show up. We know and understand all those things are happening, but there are ways that it’s pervasive in the areas that you wouldn’t suspect that more directly impact your life.”
When the world shut down in the first half of 2020 because of the pandemic shock and then reopened a few months later, restarting the supply chain was slow and complicated but the demand side was not. Auto parts suppliers in some cases had to slow down making parts for older vehicles to get more parts for new vehicles out the door. A labor shortage slowed supply churn even more at the plants and at the ports and docks where supplies are unloaded.
“A significant portion of repair parts, particularly for collisions, come from Taiwan,” said Dan Hearsch, managing director in AlixPartners’ automotive and industrial practice. “Lots of that is backed up at the ports, so availability of that stuff is not great.”
The more significant issue is the auto suppliers are less focused on making aftermarket parts for repairs to vehicles on the road and more intent on building parts for new vehicles, Hearsch added: “They’re focusing on just keeping the OEM plants running. The last thing that they want to make or have to make are service parts because service parts have a whole other level of complexity.”
The situation is not getting better, Hearsch said, because the focus remains on getting new vehicle production back up and running. For the last year, automakers have struggled to keep up with the demand because of the global shortage of semiconductors, or microchips that are used to power systems in the vehicle from the heated seats to the infotainment systems.
Dave Hebert, manager of Berkley Collision in Berkley, Michigan, has had to get creative with parts to keep his customers on the road. Instead of just relying on new parts, the shop has found rebuilt and remanufactured parts at times to fix people’s vehicles faster.
“But unfortunately the parts that we can’t get new, the supplies from the other directions, have now dwindled down,” he said.
Hebert has been working on vehicles for at least 40 years and can recall when a part or two would have a low stock, but he said he has never experienced an issue that affected this many parts at once. He also sees the situation is getting worse because of the low stock now popping up in the “alternative parts” supply.
Hebert’s advice for customers who’ve been in an accident and need repairs: “Thoroughly check to make sure that all the parts are available before they surrender the car for repairs.”
Shortage fuel price hikes
These supply woes have led to price increases. The Consumer Price Index on motor vehicle parts rose 10% from November 2020 to November 2021, according to the U.S. Bureau of Labor Statistics.
“There’s absolutely been inflation in this sector,” said Paul McCarthy, president of the Automotive Aftermarket Suppliers Association. “One thing I’d say to consumers is that, for better or for worse, it’s coming from authentic increases in the cost of manufacturing and distributing these goods. … We’ve actually been struggling to pass on the cost increases as much as we can.”
Advance Auto Parts Inc. has experienced price increases in its product costs and has worked with vendors to get the lowest price, Chief Financial Officer Jeff Shepherd said: “But this industry is fairly rational, and when necessary we have had to pass it on in the form of price.”
During the supply chain choke, Advance — with more than 4,700 stores and 234 Worldpac branches in the U.S. Canada, Puerto Rico and the U.S. Virgin Islands — still saw a 13% increase in sales in the third quarter from pre-pandemic 2019 levels.
To keep the shelves stocked, Advance worked with vendors starting last year to buy more product than the company normally would to make sure they had enough. Advance also rolled out a new tool that tells merchant teams what parts to buy and what stores need them.
“What we’ve tried to do is make sure we focused on parts where you don’t have a choice,” Shepherd said. “If you have a Ford F-150 and you need brakes, you can’t put Honda Accord brakes on a Ford F-150.”
LaFontaine Automotive Group’s parts team prepared for the supply crunch early on in the pandemic to keep a solid stock for its own service and body shop customers in addition to its wholesale customers. But the group has still seen firsthand how the shortage on items from engines to bumpers affects customers. LaFontaine operates 29 dealerships representing 51 franchises. The group also has eight collision shops. In addition to supplying those, LaFontaine has 1,000 wholesale customers.
Outlook brightens for certain parts
Here’s an example of how stressed the system is: one of the automakers LaFontaine stocks parts for would on average have 300 back orders, and right now it has about 1,500.
“It’s bad,” said Chris Lavery, parts director for LaFontaine. “Luckily, we leverage the size of our group with all of our multiple franchises, and then multiple stores within those franchises. The reps help us out a lot, but overall, it is extremely difficult to get accurate ETAs to customers.”
The situation isn’t totally bleak. The supply of day-to-day service parts like wipes, rotors and pads is getting better, Lavery said. Specialty parts from accessories to engines are still an issue, though.
“We do our best to go out of our way to procure parts from out of state and all over the country if we have to to satisfy a customer,” Lavery said.
The priority at LaFontaine and other shops is to keep customers as informed as possible about how long that procurement will take. Facing rental car prices that are up 37% year over year, according to the Bureau of Labor Statistics, customers then have to decide whether to continue coughing up more cash for rentals or deal with the alternative: have no car, take public transit or rely on one vehicle like Sellek.
“I’m a car person. I love cars, so if you gave me a different car every week, I would actually think that’s sort of fun,” he said. But “it’s a stress. It’s a stress that’s on the back of your mind all the time. And we’re already living under a lot of stress.”