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U.S. auto sales are low, but carmakers have bigger problems only ERP can fix

car racks manufacturing

The higher the hopes, the more precipitous the fall.

May has come and gone, bringing with it disappointing U.S. auto sales figures, which decreased 0.5 percent from April with 1.5 million vehicles sold, according to ABC News. As positive as 2015 and 2016 were - sales hit and exceeded 17.5 million, respectively - economists are projecting 2017 has the potential to end as the first annual decline U.S. automobile manufacturers have seen since 2009.

But although mild panic and hair-pulling is to be expected, many argue this fall is far from disastrous. In fact there's a lot of room for optimism. Far from the industry-shattering downturn trumpeted by many, U.S. carmakers are just as strong as ever. That fact does not, however, mean these businesses are beyond reproach. Despite what's happening in the economy, automobile and parts manufacturers should dwell on a few key issues and how best to solve them with enterprise resource planning software.

The average car lasts 11.4 years-about 3 years longer than in 1995.

Cars last longer - and so must retention efforts

As important as building a reliable product is, it does have one obvious downside: People use your products longer and don't buy your newest one.

According to the Bureau of Transportation Statistics, which compiled data from R.L. Polk Co., the average car lasts 11.4 years, or about three years longer today than it did in 1995. Although statistics indicate cars still change hands at least once over their lifetime, car ownership periods also expanded by about two years.

Undoubtedly, part of this phenomenon is tied to residual financial prudence left over from the recession. Now more than ever, automakers must find new ways to retain customers who are in the market for new vehicles, whether it be through buyback programs or greater attention paid to enhanced customer service throughout ownership. ERP software helps manufacturers turn customer transactions into actionable data they can analyze, predict and act on. Nurturing and retention have never been easier.

Summer inventory sell-off crucial

Flying in the face of U.S. auto industry naysayers, Business Insider's Matthew DeBord believes that parts manufacturers  have much less to worry about than they may think. He does, however, admit a few small caveats, one of which being trouble with parts inventories. After all, lackluster Q2 sales in 2017 mean automotive manufacturers risk drowning in unused supplies and the debt that accompanies them.

Sure, summer is the perfect opportunity for these businesses to shed stock overages on the parts manufacturers market. With that said, manufacturers should not let themselves be persuaded by the doom-and-gloom economic outlook some have painted. Otherwise, they run the risk of pricing parts far lower than need be and hemorrhaging revenue as a result. The auto parts aftermarket is inundated with shoddy merchandise. If offered value - online, and perhaps along with a warranty - consumers will flock, buy and relieve manufacturers of their excess.

 Parts manufacturers

Furthermore, automakers also need to weigh the cost of maintaining parts inventories versus the potential sales made from selling them off at a discount, all on a recurring basis and all while considering more realistic demand for the rest of this year. ERP software can help automotive manufacturers with planning production and control, so they always have a bead on how shifting consumer demands impact their supply chains and stockrooms.

Brace for the real downturn

Economies boom and contract, and the auto industry is certainly not impervious to such fluctuations. Even though 2017 probably won't be the hardest-fought year parts manufacturers will see in the near future, they should address problems of inefficiency and production hang-ups while the getting's still good, so to speak.

Again, an end-to-end ERP implementation for automotive manufacturers or auto parts manufacturers significantly reduces manual data entry, converts hard data into actionable intelligence and allows for greater visibility from supply to sale. Take a look at what abas can do for automakers and parts providers today, or check out the future of competitive innovation in the latest abas eBook Unbounded Manufacturing.


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