© 2021 RSM US LLP. All rights reserved.
Automotive trends and issues
Delivering value-added solutions to automotive suppliers and OEMs
The automotive sector is characterized by intense competition, a sharp focus on cost and regulatory oversight with an ongoing trend toward global sourcing and distributed manufacturing and assembly operations. Evolving technology, consumer preferences and environmental concerns are also major forces. RSM’s automotive professionals understand the challenges our automotive clients face and the climate in which they operate, including not only accounting, tax and operational issues, but also the business and technical factors that drive the industry.
AUTOMOTIVE CHALLENGES AND OPPORTUNITIES
- Production: Volumes and facility utilization have increased dramatically, causing scheduling challenges. Due primarily to required investments to increase production capacity, breakeven points have increased. This could be problematic in an economic downturn.
- Global expansion: Suppliers need to be positioned to meet the needs of the original equipment manufacturers (OEMs) that are expanding globally, particularly in Mexico and China.
- Technology and innovation: Suppliers are working with the OEMs to create value-enhancing technologically advanced products using alternative production materials and methods.
- Mobile connectivity: This technology is the latest trend to have an impact on consumers' mobility and transportation choices, and also seriously affects board-level decisions regarding model refresh cycles.
- Research and development life cycle: The automotive sector is transforming how people use their vehicles by adding increased functionality, complexity and dependences to model designs. Autonomous vehicles are also gaining visibility as they enter the testing phase. Adding to the development challenge is the ever-growing integration of systems, models and data application information as well as mobile connectivity.
- Workforce sourcing and retention: Suppliers struggle to find the skilled talent to operate increasingly sophisticated machinery. They are responding by starting intern and apprentice programs, partnering with local colleges and coordinating with economic development programs and skills-training resources.
- Repatriation and transfer pricing: Most automotive suppliers have cross-border transactions, and many have non-U.S. ownership. As a result, many U.S. manufacturers are facing increasing pressures to repatriate money to non-U.S. parent companies.