The automotive industry was one of the first to feel the disruptions caused by shipping through the Red Sea, particularly among electric vehicles. But the current earnings reporting season indicates the impact on supply chains may not be as significant as initially feared, according to reports from market analyst firm S&P Global Market Intelligence February 20.

Tata Motors Ltd. has noted that the disruptions in the Red Sea have “not caused us a serious concern.” There are bidirectional issues, with delays in parts deliveries as well as sales to mainland China of U.K.-built vehicles, although “not all of those will be forced to go around the Cape (of Good Hope).” There is an impact on inventory though, as the result is having “more vehicles on the water than we would normally expect to have.”

Meanwhile, Volvo Car AB is more relaxed, stating that the firm’s supply chain “has the ability to absorb some disturbances” with “some increased logistics costs” which “we don’t expect to be significant.”

Compagnie Générale des Établissements Michelin SCA has a small exposure with “4% of our overall product flows which were going through the Suez Canal.” The firm has been “doing some preventative production reduction” to avoid having forced stops to production lines if inventories run dry later.

S&P further reports that parts producer Magna International Inc. has stated that “we haven’t seen really anything material,” noting that the chip shortages of the past two years were much more serious.  Automotive safety parts supplier  Autoliv Inc. has similarly asserted that the “situation has not yet had any measurable impact on our own operations,” although “some customers have reduced their volumes short-term.” It expects that “price adjustments and other compensation will offset cost inflation” in logistics.

S&P concluded that, taken in aggregate, sentiment in the automotive sector toward supply chains has become less positive, with 33% of firms making positive comments in the first quarter compared to 40% in fourth quarter, based on S&P Global’s machine-readable transcripts and ProntoNLP analysis. The number of neutral comments rose from 32% to 42%, the highest since the second quarter of 2021, suggesting firms have yet to enumerate the impact of the disruptions.