The Biggest Risks to Revenue in the Automotive Supply Chain Right Now

Article Highlights:

• Being a multitrillion-dollar industry with original equipment manufacturers (OEMs) and suppliers all over the world comes with significant challenges. Supply chain risks are one of these challenges, and the hazards associated with sourcing and procurement represent an inevitable aspect of auto manufacturing. 
• The ongoing conflict in the Middle East—and the blockade currently being imposed on the Strait of Hormuz—is making it more difficult for Bahrain, the UAE, and other Gulf nations to export materials like aluminum to global customers. This is a looming problem for the auto industry, which will have to start securing alternative sourcing for the metal, or risk downgrading their production targets for 2026. 
• The tricky irony for carmakers is that while their demand for RAM and NAND continues climbing, the supply of these semiconductor commodities is going in the opposite direction. This stark supply and demand mismatch within the memory chip market has triggered enormous price increases for memory products, while limited availability is compelling manufacturers all over the world to rethink their production strategies.

With hundreds of direct suppliers and thousands of subtier entities across their full manufacturing networks, automakers may have the largest, most complex supply chains of any industry in the world. The depth and breadth of these value chains shouldn’t come as a surprise, though: cars are growing more and more technologically sophisticated with each passing year, adding new entertainment capabilities, layering in additional safety features, and innovating in trailblazing new ways that are transforming the way we travel.

But being a multitrillion-dollar industry with original equipment manufacturers (OEMs) and suppliers all over the world also comes with significant challenges. Supply chain risks are one of these challenges, and the hazards associated with sourcing and procurement represent an inevitable aspect of auto manufacturing. These risks are especially damaging when they hit a company’s revenue, costing them millions via production issues, increased costs, or sourcing bottlenecks. 

What are the most significant risks to revenue for automakers right now?

What’s the Current Revenue for the Auto Industry?

The global automotive sector sold around 90 million cars in 2025—a figure that’s both a record for the industry and a testament to just how consistently robust demand for vehicles remains worldwide. The total revenue for the industry is now around three trillion dollars annually, making it one of the single-largest markets in the world. According to the International Energy Agency, the auto sector “accounts for around 6% of gross value added by manufacturing, or around 1% of global GDP in 2024.”

Auto manufacturing is concentrated in the U.S., Asia, and Europe, with China, Japan, Korea, the European Union, and the U.S. accounting for roughly 80% of the total auto industry revenue. 

Top Auto Manufacturers by Revenue

1. Volkswagen: The German carmaker, which manufactures passenger vehicles, trucks, and commercial automobiles, reports annual revenue of around $380 billion.
2. Toyota: The Japanese juggernaut makes some of the best-selling cars in the world, including the RAV4, Corolla, and Camry. In 2025, it reported revenue of roughly $330 billion.
3. Ford: The Detroit manufacturer is an iconic U.S. brand, responsible for American classics like the Ford Mustang and F-150 truck. In 2025, Ford earned $187 billion in total revenue.
4. Stellantis: The product of a 2021 merger between French auto manufacturer Groupe PSA and Italian-American carmaker FCA (Fiat Chrysler Automobiles), Stellantis is responsible for popular car brands like Jeep, Dodge, Chrysler, and Alfa Romeo. Stellantis made $178 billion in 2025.
5. Mercedes-Benz: The German automaker famous for luxury sedans and SUVs, Mercedes-Benz reported revenue of $153 billion in 2025.

The Most Significant Risks to Automakers’ Revenue

Aluminum and Other Raw Material Shortages 

Automotive manufacturers rely on a wide range of raw materials to produce cars, including aluminum, steel, plastic, and rubber. In addition, the auto supply chain relies on substances critical to manufacture increasingly critical components like semiconductors and batteries. These expansive raw material needs create major dependencies—vulnerabilites that have been exposed time and again over the past half-decade.

Now, geopolitical tensions and conflict in the Middle East are exposing these raw material dependencies yet again, creating growing industry pain points. The Middle East is a major producer of aluminum, with Bahrain and the United Arab Emirates (UAE) alone now accounting for around 9% of total global aluminum production. And that figure doesn’t fully convey the degree to which American can manufacturers in particular rely on aluminum originating in the Middle East. U.S. businesses import over 80% of the aluminum they use, with about 20% of that total imported metal arriving from the Gulf region. 

The ongoing conflict in the Middle East—and the blockade currently being imposed on the Strait of Hormuz—is making it more difficult for Bahrain, the UAE, and other Gulf nations to export materials like aluminum to global customers. This is a looming problem for the auto industry, which will have to start securing alternative sourcing for the metal, or risk downgrading their production targets for 2026. 

Now, geopolitical tensions and conflict in the Middle East are exposing these raw material dependencies yet again, creating growing industry pain points.

The Memory Chip Supercycle

The auto industry is more dependent than ever on semiconductor manufacturing. There are now somewhere between 1,000 and 3,000 chips in most new cars, depending on the make, model, and trim level. As staggering as those figures are, however, they don’t sufficiently illustrate just how dependent automakers are on memory chips specifically. According to memory manufacturer Micron, in 2024 the average new car used a combined 90GB of RAM and NAND, and the chipmaker projected that by 2026 that dependence would triple to over 270GB for both memory types. 

The tricky irony for carmakers right now is that while their demand for RAM and NAND continues climbing, the supply of these semiconductor commodities is going in the opposite direction. This stark supply and demand mismatch within the memory chip market has triggered enormous price increases for memory products, while limited availability is compelling manufacturers all over the world to rethink their production strategies for the next few years. 

For automakers, the memory chip dilemma introduces two overlapping financial risks. First, the surging costs of memory commodities will either cut into their profit margins or force them to hike the price of new vehicles—a measure that could salvage their bottom line in the immediate term but erode demand in the months and years to come. Second, the severe limitations on semiconductor availability may force carmakers to restrict their production in 2026 and 2027, as they come to terms with the reality that memory manufacturers like Micron, SK Hynix, and Samsung simply can’t catch up to runaway demand. 

No matter what strategy automakers develop and commit to, the memory chip shortage is imposing major financial pressures on the chip-hungy industry. 

No matter what strategy automakers develop and commit to, the memory chip shortage is imposing major financial pressures on the chip-hungy industry. 

China Dependencies 

As geopolitics continue to infiltrate supply chains, automakers are working to develop strategies focused on building more secure, resilient manufacturing networks. One way U.S. car companies are trying to do this is by reducing their dependencies in China. Unfortunately, many of these businesses are learning just how difficult it is to restructure these complex global webs. As a result, despite their best intentions much of the global auto industry continues to rely on China as a key exporter. 

Further, the auto industry’s dependencies on China are not concentrated in a single category. They rely on the nation for a myriad of materials and products, including:

• Lithium-ion batteries for electric vehicles.
• Rare earth elements used in magnets.
• Critical minerals like nickel, cobalt, graphite, and manganese.
• Interconnect, passive, and electromechanical (IP&E) components.
• Discrete semiconductors, including transient voltage suppressors (TVS), zener diodes, rectifiers, and MOSFETs.

These large-scale dependencies present a serious risk to revenue for automotive companies. That’s because China has demonstrated a clear willingness to cut off their global exports on a whim, choking off automakers’ supply of critical minerals and REEs. If geopolitical tensions escalate again in the near future, it’s impossible to say what other commodities the Chinese government will be willing to throttle the supply of, and how those restrictions will manifest themselves in automotive supply chains. 

Tariff Volatility

The U.S.’s sweeping tariff regime continues to function as a major obstacle for automakers. According to a 2026 survey conducted by Automotive Manufacturing Solutions and the ABB Group, nearly 30% of automotive respondents cited tariffs as a “major manufacturing challenge.” U.S. carmakers depend on thousands of sub-tier suppliers all over the world, and high tariff rates imposed on countries like China, Vietnam, and other Asian nations are driving up their overhead for components and sub-assemblies. 

According to Automotive Logistics, these new trade costs have forced car companies to rethink their sourcing strategies and longstanding assumptions about importing parts. “What began as bilateral trade friction between major economies has evolved into a systemic reconfiguration of where components are made, who makes them and which markets they can serve without punitive cost penalties,” the auto supply chain publication wrote. Because the cheap imports offered by globalization now come with significantly more risks than they did a decade ago, automakers are grappling with the prospect of onshoring, nearshoring, and other strategies that could bolster resilience but also increase costs and drag down revenue.

How the Z2 Platform Helps Automakers Navigate Supply Chain Turbulence

Major automakers understand that when it comes to supply chain disruptions and other related risks, tens and even hundreds of millions of dollars are on the line. Global supply chains are currently being buffeted by a turbulent combination of geopolitical tensions, supply shortages, and trade warfare, and the only way to maintain continuity and strengthen resilience in this environment is through effective risk management.

Supply chain risk management (SCRM) software can play an instrumental role in helping businesses in the auto industry and other sectors navigate the current risk landscape. SCRM platform Z2 offers unique capabilities for all the risks outlined above:

• Raw Material Shortages: Whether it’s aluminum, helium, or energy products, the supply chains for raw materials do not enjoy the security that they once did. With Z2, businesses are able to see deep into their supply chain, identifying where their raw materials are being sourced from and whether those regions, manufacturers, or sites are currently exposed to heightened risks. 

• Memory Chip Supercycle: “RAMagedden” is in full swing, and the supply crunch for DRAM and NAND is hitting the automotive industry hard. With Z2’s parts database, users can search through over one billion electronic components, including 1,000+ commodity types, based on technical attributes and other criteria. Z2’s database offers valuable tools to help refine searches, too, including clean, normalized data and a “crosses tab” that shows users the best available cross-references for every part. 

• China Dependencies: Understanding your geographical dependencies is arguably more critical than ever. Z2 shows users all potential COOs for their parts, giving OEMs and other businesses valuable insight into where their most glaring nation-level dependencies lie. 

• Tariff Volatility: While they might have receded from the headlines, tariffs haven’t gone away—indeed, they remain one of the foremost challenges for automakers. Using Z2, companies can see the HTS codes and COO designations associated with specific parts, allowing them to understand what tariffs apply to their operations, and in what capacity. In addition, Z2’s risk hub provides structured analysis quantifying a company’s total tariff exposure, giving them the intelligence they need to implement targeted sourcing modifications.

To learn more about Z2 and how it can help companies navigate their largest revenue risks, 

schedule a free trial with one of our product experts.