Why the world's carmakers are being forced to rewrite their supply chain playbook

Ten years ago, I could walk into my local car dealership and pick up a new car or truck for $34,000. Today, I would expect to pay closer to $50,000, or even $55,000 if I wanted an EV. That’s because the average price of getting behind the wheel of a new vehicle in the US has outpaced inflation by seven percentage points over the last decade. With one million new car buyers leaving the market since 2020, affordability has become one its most pressing challenges.  

Such warning signs reflect an automotive industry trying to keep pace with immense disruption. The EV transition has moved the industry's centre of gravity across the Pacific, to China, where EV prices fell by more than 10% last year. Here, specialist manufacturers can take advantage of sophisticated domestic battery supply chains that help them to produce cars for more than 30% less than in advanced economies. That advantage has not come from nowhere – it has been built over years of closer integration between manufacturers and suppliers, supported by enormous economies of scale. 

For established manufacturers in North America, Europe and Japan, it’s meant a significant downward pressure. They must find ways to balance the cost and speed of emerging EV-first rivals while supporting combustion-engine, hybrid and EV production simultaneously. Meanwhile, tariffs and geopolitical tensions are changing the economics of sourcing and manufacturing networks, often with little warning. 

When Ford’s chief executive Jim Farley said earlier this year that Western carmakers are “in a fight for our lives”, he wasn’t exaggerating. I would describe the state of our industry today as marked by considerable uncertainty and it’s beginning to undermine one of the industry's most fundamental requirements: the ability to plan ahead. 

The planning challenge 

Auto manufacturers have traditionally planned new vehicles and production networks three to five years ahead. Decisions about where to build vehicles, which suppliers to work with and how to move components between factories require enormous investment and long-term commitments. Yet today, many manufacturers struggle to predict what the next six or twelve months will bring. 

Just last year, on 4 March, Washington imposed 25% tariffs on imports from Mexico and Canada, threatening to upend decades of North American automotive integration. For manufacturers such as General Motors, whose Ramos Arizpe plant in Coahuila produces vehicles for the US and Canadian markets, the implications were immediate; a production network built around cross-border trade suddenly faced a very different cost calculation. The following day, Washington announced a temporary exemption for vehicles complying with the US-Mexico-Canada Agreement. For manufacturers used to making investment and sourcing decisions years in advance, the rules had changed twice in two days. 

The implications of policy reversals become clearer when you consider how deeply integrated North American automotive production has become. In July 2026, Mexico accounted for 43.6% of US automotive parts and components imports, while approximately 87% of Mexico's automotive parts exports were destined for the United States. This is a manufacturing ecosystem built around precisely coordinated cross-border flows, where components must arrive in sequence to keep assembly lines moving.  

Changing tariffs and rules of origin complicate sourcing decisions at a time when transport capacity constraints are creating further challenges. In 2023, for example, Volkswagen reportedly had $1.6 billion worth of finished vehicles awaiting transport at its Puebla plant, with railcar shortages and congestion at the port of Veracruz constraining deliveries to customers across North America. It was a stark reminder that even the most efficient production line can only be as competitive as the logistics network connecting it to market. 

DP World research estimates that a single supply chain disruption costs automotive companies an average of $1 million, through emergency transport, production delays and the resources needed to coordinate a response. When simply holding more inventory or securing spare capacity across an entire network often just adds further expense, the question, then, is how manufacturers can build resilience without sacrificing the efficiency on which their competitiveness depends. 

Designing flexibility into the supply chain 

Sometimes, the answer to a supply chain problem is to question how things have always been done. One example that comes to mind is the case of finished-vehicle logistics in Mexico. In 2024, manufacturers were facing a shortage of the multilevel rail wagons and roll-on/roll-off capacity traditionally used to move vehicles into the United States and Canada. With production continuing, the industry needed more ways to get finished cars to market. The obvious answer was to secure more specialist transport capacity. But what if we could use infrastructure that already existed? 

At DP World, we developed an industry-first solution using 53-foot intermodal containers fitted with specialist racking systems to move finished vehicles by rail. Each container can carry up to six vehicles, compared with four in a conventional 40-foot container, using North America's existing intermodal network to connect Mexican factories with destinations including Chicago, Detroit and Toronto. With transit times of eight to 14 days, the solution was designed to unlock capacity for an additional 30,000 vehicles in 2024, reducing dependence on specialist rail equipment. 

This is the kind of thinking I believe manufacturers need more of. But finding alternative ways to move goods is only part of the equation. Manufacturers also need to know when and where those alternatives will be most valuable, and this is where technology has an increasingly important role to play.  

Our latest Global Trade Observatory research found that 70% of surveyed Chief Supply Chain Officers are already putting AI to work to improve demand forecasting or have progressed to fully AI-driven operations in this area. The opportunity that follows is to connect that intelligence with decisions on the ground. For example, if a supplier is running behind schedule, can an OEM identify the risk before it affects production? Can inventory then be repositioned, or a shipment moved through another corridor?  

Answering those questions requires a closer connection between digital intelligence and physical logistics. This is the approach we are developing at DP World, combining AI-enabled tools that bring operational data together with a global network of ports, warehouses and inland transport connections that gives manufacturers practical options to respond. 

Yet even with the right technology and infrastructure, responding quickly becomes difficult when responsibility is spread across multiple logistics providers. How manufacturers organise and manage those relationships deserves just as much attention. 

Building advantage for the long term 

I believe there are a few practical changes manufacturers can make to improve the performance of their supply chains. 

First, rethink how supply chain costs are measured. Automotive manufacturers have spent decades negotiating competitive freight rates, but the cheapest individual contracts do not always produce the lowest overall cost. When shipments pass through several providers, OEMs often absorb the expense of coordinating them, particularly when disruption forces a change of plan. Those costs are spread across procurement, logistics and production budgets, making them harder to quantify. Manufacturers should assess the cost of managing the entire journey, including the resources required when something goes wrong. 

Second, simplify who takes responsibility. At DP World, we are encouraging manufacturers to assign entire cargo flows to one accountable logistics partner, rather than procuring each transport leg separately. This gives the provider responsibility for coordinating the journey and managing changes when necessary. OEMs can still maintain different partners across their wider networks, preserving competition while reducing the operational burden on their own teams. 

Third, bring logistics into long-term planning earlier. Manufacturers cannot know precisely where demand for electric, hybrid and combustion-engine vehicles will be in five years. But decisions about production locations and supplier networks will determine their logistics requirements for years to come. Involving logistics partners earlier can help OEMs assess the implications for inventory, transport capacity and alternative sourcing before committing to investments that may be difficult to reverse. 

Which brings me back to that shiny, new $50,000 car. Logistics alone will not close the manufacturing-cost gap with China, and some disruption will always sit beyond an automaker’s control. But when affordability is testing demand and manufacturers are fighting to protect margins, every part of the supply chain deserves scrutiny. Marginal gains, taken across an entire network, can add up to a meaningful competitive advantage. 

That is where I believe DP World is strongest. With the right logistics spine in place, manufacturers can get more from the networks they already have, maintaining efficiency while gaining the flexibility to respond as the industry changes. The next five years will test those networks in ways we cannot yet predict. My advice? Buckle up.