In this article you’ll learn the most critical metrics that companies in the Automotive Industry should track.

The article does not include metrics such as Profits and Sales that are critical to companies in all industries; rather the focus is on metrics more specific to the Automotive Industry.

By tracking your metrics, you will dramatically improve your business results.

Why? Because not only is the old saying “If you can’t measure it, you can’t improve it” true, but visibility into your metrics allows you to identify WHERE you can make the easiest and most impactful improvements.

For each metric, we will answer the following questions:

– What is the metric?

– How do you calculate this metric?

– Why is this metric important?

Let’s get started…

1. Number of Units Manufactured

What is this metric?
This metric measures how many vehicles were produced by a car manufacturer in a given time period.

Calculation
This metric is calculated by adding the total number of vehicles produced in a month, year, etc.

Why is this metric important?
This metric is important because it can help an automotive manufacturer determine if it is keeping up with customer demand and potentially if there is an oversupply of specific models within its inventory.

2. Total Cost to Manufacture

What is this metric?
This metric measures the amount of money spent by an automotive company to produce vehicles.

Calculation
This metric is calculated by adding up the total costs of resources involved in producing vehicles including material, labor and overhead.

Why is this metric important?
This metric is important because it can indicate an automotive company’s ability to produce vehicles efficiently.

3. Utilization Rate

What is this metric?
This metric expresses the capacity rate a vehicle manufacturer is utilizing during available production time.

Calculation
This metric is calculated by taking the actual vehicle output and dividing by the potential vehicle output within a time period.

Why is this metric important?
This metric is important because it signifies if an automotive manufacturer is making good use of its time and labor. A lower utilization rate may be costly for an automotive manufacturer.

4. Manufacturing Cycle Time

What is this metric?
This metric measures the time it takes for an automotive manufacturer to complete a single vehicle.

Calculation
This metric is calculated by adding the total amount of time it takes for a vehicle to move through a production line from start to finish.

Why is this metric important?
This metric is important because it helps determine how many units can be completed within a time period and determines the total number of units that will be available for customer purchase. The manufacturing cycle time is important for companies to stick to in order to produce enough vehicles for customer demand.

5. Yield

What is this metric?
This metric measures the percentage of vehicles that are produced the correct way and to the vehicle specifications the first time through the production line without rework.

Calculation
This metric may be calculated by dividing the number of vehicles manufactured properly by the total number of vehicles that went through an auto company’s production line.

Why is this metric important?
This metric is important because it tracks an automotive company’s ability to be efficient on the production line, reduce scrap, and improve capacity.

6. Defective Units/Recall Rates

What is this metric?
This metric measures the percentage of defective vehicles amongst total vehicles produced within a specified time period.

Calculation
This metric is calculated by taking the total number of vehicles that have been recalled due to a defect in the vehicle produced within a specified time period and dividing by the total number of vehicles produced within the same time period.

Why is this metric important?
This metric is an important quality measure for automotive companies. Automotive manufacturers should strive to keep recall rates low to in order to keep consumers safe as well as mitigate the costs that are associated with product recalls along with potential bad press that comes along with recalls, which may deter consumers from buying products from companies with high recall rates.

7. Inventory Turnover Ratio

What is this metric?
This metric measures the number of vehicles an automotive company sells and replaces in a given time period.

Calculation
This metric may be calculated by dividing total sales of an automotive company by number of cars in a company’s inventory.

Why is this metric important?
Inventory turnover is important because it relays how fast or slow an automotive company takes to sell its products. The metric can be used to compare an automotive company’s inventory turnover to competitor’s inventory turnover as well as the industry average.

8. Safety Incidents per Employee

What is this metric?
This metric measures the number of work related injuries within a specific period of time.

Calculation
This metric is calculated by dividing the number of safety incidents during a period of time by the total number of employees working during the same period of time.

Why is this metric important?
It is important for automotive companies to consider the safety of their employees and make sure all equipment is operating properly and employees are trained properly. Safety incidents can be costly for automotive companies.

9. Scrap Rate

What is this metric?
This metric measures the percentage of material used that is not able to be used due to being defective or errors in the production process.

Calculation
The metric is calculated by taking the amount of material that has been scrapped by an automotive company and dividing by the total number of material used.

Why is this metric important?
This metric is important because it measures an automotive company’s ability to be as efficient as possible without scrapping vehicles or materials due to errors and is telling of how well a company manages its quality control. A high scrap rate could be costly for a manufacturer.

10. Average Production Downtime

What is this metric?
This metric measures the amount of time that is not used at a manufacturing facility.

Calculation
This metric is calculated by taking the hours of downtime at a production facility within a specified time period and dividing by total time available to produce vehicles within that same time period.

Why is this metric important?
This metric is important because it measures a company’s ability to minimize production downtime at its manufacturing facilities. Production downtime is costly for automotive manufacturers.

11. Customer Satisfaction

What is this metric?
This metric measures the level of satisfaction of automotive consumers. Customer satisfaction surveys include questions about vehicle quality, safety, performance and features.

Calculation
This metric may be measured by conducting a formal satisfaction survey to understand the satisfaction level of vehicle consumers.

Why is this metric important?
Customer satisfaction is important because it provides actionable data on how automotive manufacturers can improve their vehicles. If customer satisfaction is high, clients may recommend the company/vehicle to friends and family or could also be a repeat customer.