2022 Market Trends and Predictions: Automotive
In our third installment of M. Holland’s 2022 market trends and predictions series, we spoke with M. Holland’s Automotive Market Manager, Matt Zessin, who saw automotive OEMs and their major suppliers demonstrate impressive market and operational flexibility in 2021. As he looks to 2022, flexibility will still be needed, but it won’t put a damper on the industry’s innovation or commitment to a more sustainable future.
In 2021, the automotive industry showed its resilience in new and impressive ways. Labor shortages and pandemic-related disruptions were just two challenges. Others included supply chain disruptions, materials scarcity and the global semiconductor chip shortage. Conversations that once centered on new vehicle designs and innovative materials shifted to questions about material availability, how to expedite deliveries in a disrupted world and how to staff production lines. OEMs with finely tuned supply chains and strict schedules had to adjust to making last-minute changes and re-thinking operations due to hurricanes, freezes, new COVID-19 variants and component shortages. And while production was severely tested, demand surged as consumers emerged from stay-at-home protocols with extra savings in their pockets.
Automotive manufacturers and materials suppliers found new ways to build efficiency. OEMs were resourceful in keeping lines running, engineering around certain component shortages, partially building vehicles for later completion, and, for the plastics industry, qualifying substitute products for those in short supply. Looking back on 2021, Matt was impressed by the industry’s flexibility, pointing out that in the face of major tests and challenges, it held strong and continued driving forward.
As he looks to next year, Matt warns that supply chain issues will persist, but he is optimistic that the automotive industry will continue to adapt. In the near term, he expects material availability to be the primary focus. Glass and semiconductors remain in short supply. In the plastics space, a vexing shortage of polypropylene has abated, but PC/ABS, PET resin and other materials remain tight, with the shortages exacerbated by long lead times and high freight rates for imports. OEMs will be looking more closely at material availability and pre-planning to quickly shift to alternatives when primary material is not available. Matt expects his Automotive team to be busy in the coming year helping producers identify, qualify and source material solutions to help keep North America’s automotive industry humming.
Despite the ongoing supply chain and material availability challenges, Matt sees exciting technological and sustainability advancements on the horizon, including electric vehicle (EV) innovation, a growing automotive circular economy, and a larger role for plastics in both areas.
- Electric vehicles: An industry shift from internal combustion vehicles (ICEs) to EVs accelerated during the pandemic, with most major producers announcing ambitious goals and massive investments to retool for an electric future. The shift is supported by states and the federal government through favorable tax policies and increased fleet mileage standards. It will take several years for EV technology and infrastructure to mature, but Matt believes that EVs will be the focus of most product development moving forward.
- Lightweighting: The industry’s ongoing quest to lightweight vehicles for fuel efficiency has intensified due to the EV transition. EVs must carry heavy batteries and are built to last longer than ICEs. As a result, the materials required to make EVs need to be much lighter to offset the increased battery weight and exceed traditional vehicle material durability. Lightweighting will be an important focus for Matt and his team in 2022.
- Driving a circular economy: Reducing carbon emissions through EV innovation is just one way the automotive industry is working to impact climate change. Many of M. Holland’s automotive OEM clients have goals to manufacture vehicles comprised 30% of sustainable materials by 2030, a goal that Matt suggested could be best reached by making vehicle lifecycles more circular in nature. Many automotive resins can be recovered, compounded and reused. Matt’s team and M. Holland’s Sustainability team are collaborating to help M. Holland’s automotive customers with sustainable solutions to drive a circular economy.
- Shifting focus for automotive innovation: Only a few years ago, many were projecting that 2020 would be the year of the autonomous vehicle (AV), but the technology needs more time to advance. Short-term, Matt expects the auto industry’s focus to remain on EVs, with AV technology following. With current material shortages, driving EV advancement will be enough for this year, but he suspects AV work will continue behind the scenes, even if they aren’t on the road until later this decade.
Always a leader in technical and manufacturing innovation, the automotive industry continues to show the way for other markets with its flexibility and adaptability in the face of complexity imposed by the pandemic. As the market continues to advance, Matt anticipates we will see smarter, safer, and more sustainable and energy-efficient vehicles as the industry continues a historic transition. M. Holland is excited about the innovative changes to come and is committed to working with and adapting alongside automakers every step of the way.
Share your 2021 observations and tell us what your 2022 predictions are on Twitter, Facebook and/or LinkedIn using #MH2022PredictionsSeries.
Featuring:
Matt Zessin
Director, Global Automotive
As the Director of Global Automotive for M. Holland, Matt Zessin integrates cost-effective problem solving techniques and analytical analysis to deliver high-quality materials to M. Holland’s Automotive clients. He brings relationship-building skills and expertise in supply chain management to the role. Matt works closely with account managers to develop new applications aligned with the future of the automotive industry. Prior to joining M. Holland, Matt worked for Polymer Z, an automotive plastics distribution company which was acquired by M. Holland in 2015. While there, he supported supply chain initiatives and business development activities. He has also held positions with Roadrunner Transportation Services, where he managed a company-wide pricing software used to increase new business and create pricing strategies. Matt holds a Bachelor of Business Administration degree in Supply Chain Management and Marketing from Marquette University.