A number of significant changes have been rocking the automotive manufacturing world for over a decade. The shift to EV and the rapid rise of highly competitive Chinese entrants, the increasing digitalization of vehicles and the semiconductor shortage of 2021 are just some of the major challenges that manufacturers are having to tackle, often with supply chains that no longer mirror their needs and market response times.
In this article Simon Thompson, VP Northern Europe at JAGGAER takes a look at the top 10 trends to lookout for and potential risks that the automotive supply chain will have to come to terms with in 2026.
1. Increasing use of engineered multi-node networks
OEMs and suppliers are facing persistent disruptions (e.g., material shortages, geopolitical risk), so engineering multi-node supply networks across regions and suppliers is becoming a strategic imperative. Pandemic shortages, semiconductor scarcity, rare earth export band and the risk of encountering tariffs mean that more and more manufacturers are also moving to regional supply chains, ensuring they have pre-qualified alternatives as part of their strategy to avoid costly bottlenecks.
2. Policy and geopolitical risk monitoring
Automotive sector manufacturers will need to set up systems to monitor trade-policy shifts, export bans and trans-shipment risk. With effective and timely tracking, as well as predictive technologies, they will begin to build greater flexibility to counter trade-policy risk, export controls & supply-shock vulnerability. The auto supply chain is also deeply exposed to shocks around strategic raw materials such as the rare earths required for magnets within EV vehicles. China’s export curbs on rare-earth magnets in 2025, for example, severely disrupted auto parts production in Europe.
3. AI, IoT and blockchain
As vehicle architectures evolve to meet the demands of software-defined vehicles, EVs/hybrids and high performance, new battery systems, the supply chain must keep up with more complexity. Technology will lend a hand by providing real-time visibility across transport modes for embedded decision-making. AI will support predictive risk management and autonomous planning while IoT will provide real-time operational data. At the same time we’ll see more use of blockchain to support solid sustainability claims.
4. A renewed focus on data
Even with advanced tools, poor or siloed data can severely limit tech-derived benefits. Rushing to invest in AI, for example, can yield double-digit returns but only if manufacturers have previously worked to clean and integrate data systems. Companies that have not yet done so will need to catch up with data quality, governance and integration.
5. Sustainability transparency and reporting
Regulation is increasing around battery materials, CO₂ and end-of-life vehicles. Specifically, the Battery Materials & Battery Regulation (EU) 2023/1542) will cover CE marking, digital battery passports, recycled content, and traceability, and applies to EV, industrial, automotive, and portable battery categories; while the UK is reviewing its ELV framework with the aim of increasing financial responsibility on producers for the environmental impact of their products. These are just a few of the changing requirements globally that automotive manufacturers need to track to stay competitive.
6. Upskilling the workforce
New technologies are changing the way vehicles work but also the processes used in their manufacture. To stop a digital skills gap forming between younger and older workers, or simply to keep up with aggressive competitors, auto companies must upskill their workforce to work alongside digital tools and leverage AI, rather than treating automation and human work as separate activities.
7. Cyber security
As more vehicles and manufacturing processes go digital the cyber security risks increase. Connected vehicles, over-the-air updates, cloud-connected supply chains are just some of the areas that business need to risk-proof with air-tight cybersecurity to avoid damaging production stops and repercussions along the entire supply chain. As the JLR security break in 2025 showed with all too much clarity, OEMs and suppliers will need to treat security as a supply-chain risk, not just an IT issue.
8. Speed, precision and customisation
Customer behaviour is changing, with automotive OEMs increasingly placing smaller, more frequent orders with tighter lead times as they navigate volatile EV demand and rapid technology evolution. Custom specifications are now the norm rather than the exception, particularly for battery management systems, power electronics, advanced driver assistance systems and software-defined vehicle features. This shift places new demands on procurement teams, who must now source materials quickly and in precise quantities, often from specialised suppliers with limited capacity. Close coordination with production planning is essential, yet many organisations still rely on static forecasts and disconnected ERP systems that struggle to reflect real-time demand signals.
9. Goodbye to “zero-inventory” idealism
The concept that a business should hold absolutely no stock at any point in its supply chain, receiving materials, components, or finished goods exactly when needed, in exactly the right quantity, with zero buffer or safety stock held anywhere in the system has been proven dramatically weak time and time again over the last decade. Businesses will move to toward more nuanced strategies that balance cost with resilience and other factors too.
10. Sustainability
With vehicle differentiation, new mobility models, sustainability pressures, and increased consumer expectation, supply chains are integral to brand promise, not just production cost. Greater transparency in scope 1 – 3 emissions data as well as more accurate product-level footprinting and tier-2/3 traceability will become key differentiators for businesses facing increasing regulatory and consumer scrutiny.
The automotive sector is under unprecedented pressure and will increasingly look to technology to help it evolve its way out of a rough patch. New tools and systems, however, need to be grounded in solid data and strategy to provide the transparency and insight require to drive real change in the sector.
