Suppliers should brace for geopolitical shakeups

One country that is a friend to the automotive aftermarket is only one election away from no longer being a friendly place to do business, an automotive leader warned.

As the auto care industry looks at options to bring manufacturing closer to home or with more friendly countries, there are always going to be risks, observed Leila Afas, director of global public policy at Toyota Motor North America.

And at the top is maintaining friendly relationships with countries that you’re friends with right now.

“A lot of people who are like-minded are one election away from being non-like-minded,” Afas, who served as a diplomat under two different U.S. presidents, said.

Friend-shoring and ally-shoring are recent buzzwords for working with like-minded countries.

And if governments change, what could turn further nations against each other are increasing populations and available workforces in different pockets of the world than we’re used to today. The once reliable supply chain the North American aftermarket has been used to could be upended.

When digging for raw materials, countries like the United States have shied away from “the dirty work,” she said during the MEMA Aftermarket Suppliers Global Summit in Florida.

And in countries where the minerals are abundant for electric vehicles, the U.S. is going to rely heavily on them. But if they think foreign nations will happily hand over those materials, they are in for a surprise.

“The countries that have these minerals are thinking, ‘This is our chance,’” Afas said. With a healthy workforce and a population to handle the work, they won’t let countries like the U.S. take the minerals and make money off them elsewhere. They want to do the value-added services themselves.

They’re thinking to themselves, “We want to do the processing we want to do the refining — we want to do it here. Because we’re the ones with the workers,” Afas said.

She called this the “nationalization of critical materials.”

And there could be political hurdles ahead as many countries, including the U.S., have national elections happening this year. So for a company that sells its products into dozens of markets, local and geopolitics need to be top of mind.

“You got to ensure that access to the markets is something that’s codified; it can’t be ripped up. You can’t be pulled out of it like you can pull out of a Paris Climate Accord, or you can rip up NAFTA,” Afas said. There have “to be rules that you trust are in place [so] that when you make these multibillion-dollar investments, that these laws remain in place.”

Image: Leila Afas speaks during the 2024 MEMA Aftermarket Suppliers Global Summit