*Including Automotive Parts Manufacturing
Source: Technavio. 2024; Cox-Little & Company. 2024
The once-in-a-generation shift the automotive industry faces is also driven by government bodies (national and international) implementing stringent regulations for vehicle emissions, driving manufacturers to continuously develop more sustainable automotive parts. Internationally, a coalition of 23 governments have created the International Zero-Emission Vehicle Alliance (IZEVA), to expand the global ZEV market.
The map below indicates which countries have set targets for phasing out of combustion vehicles and by which year, compared to the overall agreed IZEVA target of 2050.
Howarth, J. 2024. 10 Important Auto Industry Trends (2024-2026)
Considering how capital-intensive the global automotive industry is, it is no surprise that OEMs need to invest in new machines to keep up with innovation trends and remain competitive.
In 2024, US assembly plants are expected to spend $6.18 billion on new equipment, a 3% increase from 2023’s $5.98 billion. The average expenditure on assembly technology will rise to $1,970,582, the highest ever recorded, up from $1,905,175 in 2023, according to the 2023 Capital Equipment Spending Survey. Spending growth is evident, with 38% of surveyed plants having capital budgets of at least $500,000 for 2024, maintaining a trend above 30% for the past six years.
Source: Sprovieri, 2023; American Automotive Policy Council, 2022
Typically, when OEMs invest in capital equipment, auto parts suppliers must also retool and upgrade their machinery. For instance, in 2022, Ford, Stellantis, and GM announced several investments in their existing plants in Missouri and Michigan, prompting their suppliers to follow suit soon after.
According to a 2020 European Commission study that examined the capital spending of 2,500 of the world’s top companies, the automotive industry spent more on capital investment than any other manufacturing industry. The only industry that spent more was oil and gas.
Asset management protocols are a catalyst for benefitting all industries, including OEMs and automotive parts manufacturers, by reducing acquisition costs. Implementing preventive maintenance and asset life cycle management decreases the need for new equipment and opens avenues for cost savings. In the UK alone, over 40% of capital expenditure for motor vehicle manufacturers between 2014 and 2018 was attributed to new equipment, a figure that can be reduced with effective asset management.
Effective asset management is crucial for monitoring and tracking manufacturing assets. Implementing a robust asset management solution helps businesses efficiently handle asset acquisition, maintenance, operation, renewal, and disposal. This detailed approach enables informed decision-making and enhances financial and operational performance. By implementing asset management, and particularly asset life cycle management protocols, manufacturers can better understand when their machines need to be replaced or disposed of.
Source: Comparesoft, 2021
Liquidity Services has the expertise and tools (AssetZone®) and the platform (AllSurplus) to benefit any manufacturing company as they unlock value in idle and unused machinery, opening the way for capital to be available for future investments. With significant expertise in over 600+ asset categories, Liquidity Services can help OEMs and auto parts manufacturers achieve maximum value from their surplus by facilitating asset redeployment or selling for high recovery.