Pulse of Quality in Manufacturing Survey Reveals Impact of Geopolitical Tension, Recalls, Trade Tariffs on Automotive Sector

The third annual Octave Pulse of Quality in Manufacturing survey reveals critical insights into the quality challenges and opportunities automotive manufacturers and suppliers are facing in 2026, such as rising costs and confusion due to geopolitical challenges, product recalls, labor shortages and regulatory requirements, as well as the widespread use of AI and quality to offset the challenges.

Fifty-eight percent of respondents in the automotive sector said that trade tariffs and geopolitical tensions have impacted their business, forcing them to:

• Increase prices (66%)
• Consider onshoring parts of manufacturing (60%)
• Find new domestic suppliers (56%)
• Curb overall spend (12%)

The study also indicates that automotive manufacturers and their suppliers are either using AI today or plan to use it within the next two years within their quality operations. They’re also elevating quality from a functional discipline to a strategic priority that can have a material impact on their business.

“The automotive industry is at a pivotal moment. Against a backdrop of trade tensions, heightened manufacturing complexity, product recalls and new compliance mandates, quality is no longer just a function—it’s a strategic lever for growth, resilience and competitive advantage,” said Vick Vaishnavi, head of Octave Reliance. “This year’s Pulse of Quality in Manufacturing survey findings make it clear that the automotive industry is doubling down on quality investments and embracing AI to drive smarter operations.”

For The Pulse of Quality in Manufacturing 2026 survey, Octave collected real-world feedback on the state of quality in manufacturing, as well as the trends, issues and challenges that are top of mind among automotive professionals across the U.S., U.K. and Germany. A sampling of 276 managers and directors in mid-to-large-sized automotive manufacturing firms (with1,000 – 50,000+ employees) were surveyed.

In addition to the impact of geopolitical tension and trade tariffs, five findings from the survey, include:

1. AI adoption in quality operations has reached the mainstream
Nearly half (42%) of automotive respondents are already using AI—and 47 percent plan on deploying AI in two years.

The types of AI being deployed, include:

• Generative AI chatbots (51%)
• Augmented intelligence (AI-guided work instructions – 49%))
• Computer vision (41%)
• Agentic AI (39%)
• Predictive analytics (41%)
• Digital twins (24%)

The top AI use cases for automotive quality professionals include automating document processing (50%), automating core processes (45%), improving staff training (40%), spotting defects (38%) and predicting future trends (35%)

2. Product recalls remain a costly and persistent challenge
Despite increased investment in quality, recalls continue to impact most automotive manufacturers.

• 74% have experienced a product recall in the past five years
• 46% said the cost to rectify each recall is between $10M and $49.9M
• 47% cite internal issues as the primary cause and 42% said they are caused by suppliers

3. Regulatory requirements and complexity are on the rise

Seventy percent of respondents said that internal and external compliance requirements have increased in the past 12 months.

For automotive suppliers specifically, Advanced Product Quality Planning (APQP), Failure, Mode and Effects Analysis (FMEA), Product Part Approval Process (PPAP), change management and supplier qualification workflows are core requirements within AIAG/VDA guidance and IATF 16949 standards. This ensures consistent execution and audit readiness across the value chain.

4. Workforce shortages are putting quality at risk
A widening skills gap is directly affecting product quality across the industry.

• 68% report being impacted by labor or skills shortages
• 83% say these shortages are negatively impacting product quality

5. Manufacturers are elevating quality to a strategic, revenue-driving priority
Investment in quality is accelerating as automotive organizations tie it directly to business performance. In fact, 70% of respondents said their organizations expect to increase spend on quality programs in 2026. The key drivers to increased quality investments include:

• Increased revenue (49%)
• Improved compliance (48%)
• A stronger supply chain (39%)
• Reduced costs (35%)
• Reduced risk (29%)

  About the Survey Methodology

  The survey was given to individuals within automotive sector organizations responsible for compliance, continuous improvement, digital transformation, document control, IT, Lean Six Sigma, process improvement, quality management, regulatory affairs and supply chain management.

  Click here to download the Pulse of Quality in Manufacturing 2026 eBook.

About Octave:
Octave (NASDAQ:OCTV) provides enterprise software that helps organizations design, build, operate and protect critical industrial and infrastructure assets. Octave supports decisions across the full asset lifecycle where performance, safety and reliability matter and failure is not an option. Octave connects engineering, operational and safety workflows, enabling customers to convert complex operational data into decisions that improve performance, resilience and incident response across real-world environments. Octave has more than 7,000 employees in 45 countries. Learn more at octave.com and follow us on LinkedIn.