Problems at Caterpillar Logistics, which recently took over the Land Rover supply chain, have left the company’s dealers facing a shortage of spare parts.
Given that spare parts are a major source of income for car manufacturers, the problems highlight just how vulnerable the modern car industry is to missing links in supply chain.
First MG Rover and now Land Rover are paying the price for an earlier decision made by BMW, and Caterpillar has been the culprit in both cases. Land Rover dealers are now facing shortages of spare parts, forcing them to leave vehicles standing for longer than necessary.
MG Rover began using Caterpillar in March 2002, and the teething problems that followed led to a week-long suspension of new car production, in order to allow the necessary parts to be sent to dealers for aftermarket repairs.
Land Rover had also been due to make the switch in March under a deal with BMW, former owner of both Land Rover and MG Rover. The hope was that both carmakers would increase their income from parts sales, which represent one of the most profitable areas of the business.
Despite a later introduction for the new company, however, the problems persist – around 88% of the 55,000 or so parts have been available, compared to a normal operating figure of 95%.
Both MG Rover and Land Rover will be hoping the short-term losses will more than be made up for with the long-term revenue increases. The situation is expected to improve in Q1 2003 – but for the time being, both dealers and customers are suffering.
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