Taking CapEx out of the automotive supply chain is now more important than ever

Taking CapEx out of the automotive supply chain is now more important than ever

With growing uncertainty about the future, moving to CHEP share & reuse means less non-core CapEx and more economic – as well as environmental – sustainability.

The automotive industry was already under enormous pressure: the push for electrification, increasing sustainability legislation, Brexit, and social movements away from car ownership. Now the Covid pandemic has created even more disruption and uncertainty.

Most manufacturers and component suppliers were already left with excess capacity in 2019. Vehicle sales are expected to fall to just under 62m units in 2020, down from 80m in 2017. [Footnote 1] And two-thirds of CFOs expect their capital expenditure to decrease over the next three years [Footnote 2].

Yet capital for investment will be vital to remain competitive as the industry pivots towards non-carbon powertrains, and major tech players have the cash to invest in new mobility models that threaten traditional OEMs.

One of the non-core capital expenditures in automotive sector is building and running a packaging transport pool. Not just in the packaging equipment themselves, but also the warehousing needed, the excess stock required as insurance against changing demand, the technology for managing it, repair facilities and more.

All this costly non-core investment can be eliminated by switching to a managed pooling service.

With CHEP, companies only pay for the packaging they need, when they need it. With the world’s largest share and reuse pool, continuity and quality of supply is guaranteed – whatever changes the market is going through.

As Murray Gilder, VP CHEP Automotive & Industrial Solutions says: “Switching to a pooling service helps our automotive customers streamline their supply chain,and cut all the costs associated with owning packaging equipment. They no longer need to buy – they share instead.

 

Footnote 1: Statista 29/10/2020:
https://www.statista.com/topics/1487/automotive-industry/


Footnote 2: Deloitte Long Covid Recovery report: https://www2.deloitte.com/uk/en/pages/finance/articles/deloitte-cfo-survey.html

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Taking CapEx out of the automotive supply chain is now more important than ever