Innovative Strategies for Automotive Supply Chain Resilience

Tariffs are significantly altering the automotive landscape, creating both challenges and opportunities for original equipment manufacturers (OEMs) and demanding greater supply chain resilience.

In this context, procurement and supply chain leaders are under increasing pressure to rethink their strategies and adapt to these challenges. In our recent webinar, "An Integrated View of the Auto Supply Chain," S&P Global Mobility experts shared key insights on the current state of the industry, focusing on the impact of tariffs, supply chain issues, and the strategic responses from original equipment manufacturers (OEMs).  

By examining recent data and trends, their discussion shed light on how these elements influence vehicle production and sales, helping leaders to make more informed business decisions for tomorrow, despite the chaos of today.

For instance, based on an example model, we can see that the weighted tariff rate for European Premium brands rose from 1.7% in May 2024 to 18.2% in May 2025. This dramatic increase is affecting vehicle pricing and sales strategies, compelling OEMs to reassess their approaches.

Additionally, US light-vehicle sales in June fell to 1.3 million units—down 4.2% from the year prior and 13.1% from May 2025.  While tariff concerns may have temporarily boosted auto sales between March and May, June figures reflect a continued cooling of demand. Barring further progress on the tariff and trade situation, S&P Global Mobility expects auto purchase conditions and new registrations to deteriorate in the second half of the year.

Debbie Capell, Executive Director at S&P Global Mobility, offered an assessment on import tariffs for complete vehicles—those fully built either domestically or overseas and sold in the US. Understanding when and where vehicles are produced and sold is key to tracking how these factors influence sales, pricing, and production changes.

OEMs are under immense pressure to adapt to new tariff regulations while maintaining their competitive edge. To mitigate the immediate impacts of tariffs, many manufacturers are implementing short-term initiatives, such as keeping prices steady and launching advertising campaigns to reassure consumers.

In the long run, OEMs are shifting toward tighter inventory management and adjusting production volumes. For example, instead of maintaining a standard 90-day stock, many are moving to a more responsive inventory model. This flexibility allows them to quickly adapt to changing market conditions and protect their profit margins.

The impact of tariffs varies widely across vehicle segments, with smaller vehicles and luxury brands facing exposure levels as high as 99%. This variability means that OEMs must be strategic in their pricing and inventory decisions to remain competitive.

The automotive supply chain industry is also experiencing shifts in consumer demand and sales volumes, which require agile responses from OEMs.  

Mark Fulthorpe, Executive Director of Global Light Vehicle Production Forecast at S&P Global Mobility, pointed out that regularly updated forecasts offer valuable insights into industry trends, enabling stakeholders to anticipate changes and adapt.

By monitoring registration data and market trends, manufacturers can effectively adjust their forecasts and strategies. Understanding peripheral risks—such as raw material availability and trade restrictions—is essential for developing contingency plans that mitigate disruptions.

Flexibility in sourcing and production is also vital. Automakers and suppliers are leveraging existing capacities and making pragmatic adjustments to their operations. A prime example is the repatriation of the Nissan Rogue to the US, showcasing how companies can adapt by utilizing spare capacity to meet market demands.

The transition to electric vehicles (EVs) is filled with uncertainties, especially as regulatory pressures and consumer incentives fluctuate.  

Eric Anderson, Associate Director of Light Vehicle Powertrain Forecasting at S&P Global Mobility, highlighted the importance of understanding regional consumer readiness, noting that consumer adoption rates differ significantly between North America, Europe, and Greater China.

Companies must stay informed about technological advancements and market conditions to align their strategies with consumer expectations. The adoption of full hybrids is expected to grow significantly, providing a cost-effective solution that positively impacts emissions and fuel efficiency.

A shortage of these materials can lead to production delays and increased costs, ultimately hindering BEV adoption. To navigate these challenges, procurement leaders need to identify alternative sourcing strategies and build relationships with multiple suppliers. Exploring innovative technologies, such as rare earth-free motors, can also help reduce dependency on specific materials.

In summary, the automotive industry is at a critical juncture where strategic planning and adaptability are essential for success. Position your organization to thrive regardless of uncertainty with reliable data and expert analysis to support your automotive supply chain management strategies.

Download the whitepaper, “Innovative Strategies for Supply Chain Resilience in the Automotive Industry,” to gain deeper insights into navigating tariffs and enhancing supply chain resilience.