Automotive

Through RSM’s delivery of a single global audit methodology coupled with leading audit software, including enhanced data analytics tools, RSM automotive audit professionals can assist clients with:

• Assessment of accounting policies and assistance in optimising policy decisions
• Transaction related services including valuation and purchase price allocation
• Assistance in accounting for business combinations
• Financial statement audit, reviews and compilations
• Review of technical accounting memoranda and conclusions
• Employee benefit plan audits
• Carve out financial statement audits
• On-call technical accounting consulting
• Review of ongoing revenue recognition
• Spearhead the organisation’s efforts in preparation of Forms 10-Qs and Form 10-K

RSM’s tax professionals have a keen awareness of the issues facing automotive suppliers and original equipment suppliers globally and can provide insights involving:

• Domestic federal and international tax structuring
• U.S. domestic tax credits ASC 740 services
• Cost segregation studies
• Credits and incentives
• Expatriate compliance and planning
• Global compliance and statutory reporting
• International tax services and structuring
• IRS and state and local audit defence
• M&A diligence and planning
• Sales and use tax planning
• State and local tax issues
• Tax co-sourcing and compliance
• Transfer pricing documentation and planning
• Unclaimed property
• Tax technology selection and optimisation services
• Indirect tax recovery

RSM’s consulting specialists offer a wide array of services squarely focused on issues and topics that are front and centre to the automotive industry.  Whether working with technology or management consultants, privacy and security experts, or transaction advisory specialists, RSM is positioned to support the specific needs of the automotive industry in the areas of:

• Breach response
• Business valuation
• Business process assessment and improvement
• Business intelligence
• Cash management
• IT services (ERP and CRM, business intelligence and IT strategy)
• Acquisition integration support
• Performance improvement (corporate)
• Operational audits (unit level / supply chain)
• Financial accounting outsourcing
• Fraud detection and prevention
• Inventory management and controls
• Internal audit services
• IPO readiness
• Lease due diligence, administration and advisory services
• Litigation and dispute advisory
• M&A advisory and due diligence
• PCI compliance
• Security and privacy risk mitigation
• SOX compliance and international control consulting
• Tenant lease audits
• Technical accounting consulting
• Managed IT services
• Digital transformation
• ERP assessment and implementation

Automotive markets like China are expected to continue growing, yet other markets such as Japan and South Korea are expected to stabilise. Established automotive markets such as the US, EU and UK are now expecting to decline.

In response to this, automotive suppliers will need to define their end-game strategy and rethink their product portfolio in order to capture future growth opportunities. Suppliers will need to begin scenario planning with the help of data analytics and develop new business models.

Alternate supplier / vendor options will drive new supply chain alternatives.

Supply chain disruptions will cause most automotive suppliers to reimagine, realign and look to product diversification and product adaptation creating new markets and product mixes. Automotive industry consolidation may continue as a result of market realignment initiatives.

Corporate resiliency will be critical to navigate through future disruptions bringing long term sustainability of profitability and growth to the automotive industry.

Advanced driver assistance and fully autonomous vehicles present a tremendous value offering for consumers. However, they face regulatory and consumer acceptance hurdles.

Suppliers must reassess their long-term product / programme and technology roadmaps to stay ahead of the competition and understand regulatory issues.

Robotics, business intelligence and data analytics will bring higher quality, and lower recalls to the industry. 

Protecting a company’s intellectual property, data privacy and security of data is the norm and embedded in the corporate strategy of automotive suppliers and OEM’s.

Many existing competencies will become obsolete as intense competition arises from technology players and products entering the automotive industry. Suppliers must build capabilities for the development of customer-oriented products by conducting location optimisation analysis and using value chain analytics.

Continuing to invest in R&D for future technologies and product innovation will provide a platform for future products that align with consumer preferences.

For OEMs, there is a risk of market share and profit share loss as more companies outside of the automotive industry offer technology and software products. Investors take note of this volatile environment and value the automakers accordingly.

A lower operating cost base is necessary to cope with increasing competitive pressure, especially for decreasing segments. Automotive manufacturers will need to evaluate their supply chains through analytics and begin scenario modelling.

Commoditised suppliers are facing decreasing valuations resulting from greater competition and lower profitability putting their access to capital at risk. Additional financing needs for new growth areas and diverging business strategies demand a review of current financing plans. In response, automotive suppliers will need to conduct risk and impact assessments and consider corporate restructuring.

Scenario planning and profit optimisation will be required. The ability of organisations to provide more accurate forecasting of production levels as well as financial models will be required by lenders and investors. 

The coronavirus outbreak has caused significant disruption to automotive sales, manufacturing and supply chains. Significant disruption inevitably causes companies to respond with a campaign to diversify their suppliers, leading to higher costs in the short-term. With uncertainty continuing to remain, the automotive industry is continuing to accelerate industry consolidation and transformation, with organisations focusing on greater resiliency, innovation and investment in emerging growth markets.

• Innovation – Evaluate the business model, looking at the end-product throughout the production process using effective business intelligence and analytic tools, or deploying robotics, innovation brings a significant new trend in terms of how we look at the manufacturing process.
• Smart consolidation – Automotive suppliers must critically look at the components being manufactured and consider if there are any synergies available for consolidation.
• Cost containment – Automotive suppliers must focus on costs, leveraging innovation in both product development and product manufacturing to maintain competitive position while creating long-term market value to investors.
• Adapted products and adjacent markets – Gaining an understanding of evolving market demands and find ways to apply expertise to new markets.

• Manage R&D spending and overall capital spending in the short, middle and long term
• Minimise inventory levels and asses other capital sale lease-back alternatives due to the economic shock from the pandemic
• Maximise liquidity resources necessary for operational needs including governmental incentives, tax and other business incentives

Technology is the latest trend to have an impact not only on consumers' mobility choices and transportation choices but it also seriously affects the decisions made in the board room regarding model refresh cycles.

The ever-changing requirements regarding vehicle weight impacts your product development cycle, manufacturing processes and your material choices.

• Electric drivetrain
• Battery / Fuel cell
• ADAS and sensors
• Electronics
• Infotainment and communication
• Robotics and Industry 4.0
• Sensor technologies and other autonomous technologies

• Technology – Suppliers will need to develop and acquire cutting-edge technologies to preserve their position in the market
• Mergers and acquisitions will enable suppliers to grow shareholder values and obtain funding for further research and development
• Diversification – With the automotive industry in a state of great flux, suppliers will need to diversify to discover their top growth opportunities
• Realignment of vendor and supplier contracts with required supply and demand and OEM projected production levels

• Wheels and tires
• Seats
• Body
• Interior
• Climate control
• Frame
• Suspension
• Window and windshields

• Shift investments toward growth segments and focus recourses on high-return product areas
• Acquisitions or mergers to improve scale benefits and maximise cash flow
• Divest business matrix and products that do not contribute to the growth strategy
• Seek product adaption as a means of leveraging R&D investments to enhance existing products or expand new product offerings

• Transmission
• ICE
• Brakes
• Axels
• Exhaust System
• Steering
• Fuel System

• Invest in developing markets with less technological advancement
• Consolidate and leverage business areas
• Sell slow or struggling product mix to competitor or PE to shift focus