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Regional Auto Supply Chain Dynamics In 2024

Automotive assembly line
Image via Wikimedia Commons


  • Over the past few years, different regions experienced different levels of disruption to their supply chains
  • North America was the hardest hit, as it is the farthest away from most major supply sources
  • Conversely, Asia-Pacific and European markets were able to remain relatively stable
  • The E.U. saw the least disruption, as buying a vehicle there is often a long decision making process due to the abundance of viable public and long distance, high speed transport
  • We think that if the North American manufacturers had relied less on “just in time” supply, as well as had a stockpile of parts for mass production models, the disruptions in production of the past few years could have been economically minimized

A while back, we did an analysis on the supply chain “ripple effect” from the global pandemic. The key takeaways from that analysis was that “just in time” supply and the silicon shortages after the pandemic were driving prices up, as well as decreasing overall inventory of new cars.

What we did not properly dig into at the time, however, was that there is a third and very significant impact on the supply chain: Region.

Chinese and Indian automakers have been surging in growth over the past decade, joining other Asian-Pacific automakers in impacting availability of materials. While they often have their own suppliers in-country or nearby, there are only finite places in the world to get the raw materials, so there is often a prepared surplus of supply.

The knock-on here, and what we are analyzing today, is just how much of an effect this is having in the other major markets around world.

Financial Performance Index Analysis

Using data available online from Klynveld Peat Marwick Goerdeler (KPMG), over the past four full fiscal years measured at the end of Q3, North America (NA) was the only market that saw a major dip in financial performance (FPI). All major markets (NA, Europe (EU), Asia-Pacific (ASPAC)) were above 90 points out of a possible 100 in 2020, and all saw growth into 2021.

Where the FPI falls for North America is in 2022, dropping to 88 out of 100. The other two markets sustained their 2021 rate, at 95 for the EU and 96 for ASPAC. In 2023, NA gained a single point to 89, the EU gained a single point to 96, and ASPAC stayed steady at 96 out of 100.

KPMG financial performance index

So what does this mean?

Regional variations in surplus supply is the key effector here.

North America has the automotive industry mostly concentrated in one nation, the USA. When the supply chain faltered in 2020 and 2021, the regional surpluses from Canada, the USA, and Mexico were all “dipped into.” This kept production as stable as possible, and with the consumer looking to buy a vehicle in the second year of the pandemic, there was subsequent growth.

In 2022, before the lockdowns were lifted in North America, every industry was starting to scrape the literal bottom of the barrel. This hit everything from consumer electronics to cars and trucks. Everything jumped in price to convert supply to cash without posting too much of a loss.

Because China and India are powerhouses in ASPAC, Japan and Taiwan being the other two major nations, they were all able to build a very large surplus of supply compared to North America very quickly. It also helps that one of the major global suppliers of silicon, TSMC, is located in Taiwan, the literal supply distance was also very short compared to North America.

The EU was also able to effectively implement a stable supply network, despite facing some shortfalls that all markets felt. This was focused mostly on the silicon shortage, however they did have a “land bridge” effect across the Asian subcontinent and didn’t have to rely on overseas shipping or air freight nearly as much.

Conversion Of Supply & Production To Cash

For the automotive market, this metric focuses on two major areas: Production to purchase (Cash Conversion Cycle or CCC), and Days Inventory Outstanding (DIO).

Cash Conversion Cycle

A CCC is defined as the median time it takes for a vehicle to finish production to being purchased. Over the past five years, this timeframe has steadily grown in North America due precisely to the supply chain squeeze in 2022 that is still having ripples into 2024. The cycle grew from 35 days in 2019 to 48 days in 2023.

KPMG Cash Conversion Cycle

Oddly, this also happened in ASPAC, despite their surplus and shorter supply chain, growing from 51 days to 60 days to convert. The only market that saw a marked improvement in the cycle was EU, topping out at 76 days in 2020 and falling to 64 days in 2023.

Days Inventory Outstanding

DIO is defined as the time it takes a vehicle that was not built to order to arrive on a dealer’s lot and subsequently be sold. These are your Ford F-150’s, your Toyota Camry’s that you can walk into a dealership tomorrow, buy, and drive off the lot within a couple of hours.

KPMG Days Outstanding Inventory

NA saw major delays in sales here, rising from 35 days in 2019 to 52 days in 2023. ASPAC also suffered, rising from 51 days to 64 days.

The EU, however, remained mostly steading, starting at 72 days in 2019, topping out at 78 days in 2021, and then falling to 75 days in 2023.


The major takeaway here is that despite all markets suffering supply chain issues, because of the trends in the EU market before and post pandemic, things have remained relatively stable there. This does coincide with known consumer behavior in the region, as buying a vehicle in Europe is often a long, drawn out, measured thing.

European rail network
One of the biggest reasons for not having a car in Europe is the availability of high speed rail. This is a very, very simplified overview of just how interconnected all the major cities are in Europe and Western Asia. Image via Wikimedia Commons

In ASPAC and North America, however, impulse buying and the vehicle as a status symbol are both strong trends. While some nations in ASPAC do have strong alternate transit networks, no other market has the availability that EU has. You can take a train from Talinn, Estonia to Naples, Italy, with only a couple of short layovers at hubs like Munich, Paris, or the like.

Because of that behavior, when you buy a vehicle in the EU, it’s a major decision, hence the length of the DIO and CCC there. When the pandemic hit, an automaker could stop production for an entire month and realistically not see any dip in either metric by the time they ramped production back up.

In Sum

The major reason that prices are still steadily increasing and supply is still scarce in North America is that the entire region was, in purely objective data, not prepared for a major disruption in production. The reliance on just in time supply to build cars as quickly as possible was already a precarious tactic to adopt, but to remain competitive, US automakers had to almost literally shovel units out the factory doors.

With units waiting on dealer lots during a pandemic and remaining unsold while more units were produced, in effect the US backed itself into a corner. We think that if a reduction strategy had been implemented, slowing down production and allowing for existing inventory to start organically selling, the supply chain would have still been disrupted, but not nearly to the extent it was when the wells ran dry in 2021.

Then again, hindsight is often 20/20, so at the time, no one even knew a pandemic would be declared and production halted in mid-2020. We only hope that the automakers have learned from the experience and adopted a more sustainable surplus of supply. To do this, however, the reliance on just in time supply would have to be lowered, and we all know that the customer wants things now, nownow