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OESA Supplier Barometer: Sentiment rises above neutral level as headwinds persist, new threats surface

Outlook has improved from the fourth quarter of 2021 despite continuing concerns

Southfield, Mich.—According to the Q1 2022 OESA Automotive Supplier Barometer Index (SBI) — a gauge to measure the sentiments of North American automotive supplier executives — the industry outlook has improved from the fourth quarter of 2021 despite continuing concerns related to production shutdowns and labor availability.

Results posted a marginally optimistic reading of 52 for the period, 2 points above a neutral level of 50 but 18 points above negative results from Q4 2021. Sentiment improved sequentially across firms of all sizes but remains in pessimistic territory for the largest suppliers.

The Q1 2022 OESA Supplier Barometer focused on Production, Planning and Electrification. The results indicate: 

  • Production shutdowns, supply chain shortages, labor availability, and the inability to fulfill customer volumes remain as the top threats to the 12-month industry outlook but improved sequentially. However, there are elevated risks from the omicron variant, higher interest rates and U.S. economic weakness.
  • The primary internal and external production issues are related to supply chain constraints or disruptions while the industry continues to struggle with labor shortages and are expected to be much worse than 2021.
  • Finished inventories increased for 66 percent of suppliers as they continue to struggle with last-minute shutdowns of OEM facilities, adding increased carrying costs to a long list of cost pressures within the current business environment.
  • Battery Electric Vehicle (BEV) program development is driving innovation across the supply base despite concerns over program profitability. Suppliers are neutral in the view that BEV production will reach 10 percent of global production within the next 5 years.

“Even as suppliers face historic inflation and persistent supply chain constraints, optimism improved as North American light vehicle output is forecast to jump by two million units in 2022 to 15.0 million units,” said Mike Jackson, executive director, strategy and research, OESA.

“It far surpassing supplier breakeven levels for the first time in three years. Despite intense cost pressures, suppliers remain committed — investing 4 percent of sales to R&D in leading areas of advanced materials and powertrain technologies, to align with dramatic BEV growth that is already changing how leading firms invest, partner, nurture talent, compete and manage risk,” Jackson said.    

The Q1 SBI chart and a full copy of the Supplier Barometer results are available on the OESA website at: https://www.oesa.org/resource/oesa-automotive-barometer-studies.

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