As automotive suppliers and OEMs continue to expand among various global markets, data privacy and navigating complicated bribery laws top the list of challenges that may hurt the bottom line, says a recent survey by the Dykema Automotive Institute, a U.S. law firm with offices in Detroit and Bloomfield Hills.
“Part of the purpose of this survey is to (remind) people that these are some things they should be thinking about,” says Aleks Miziolek, director of Dykema’s Automotive Industry Group. “The automotive industry is incredibly complex and now with the increase in volume, they have a lot of issues with respect to meeting delivery requirements. It’s hard to make time for some of these (issues), and there’s a learning curve in terms of how to handle the incredible number of issues that are being thrown at you.”
The survey — distributed to a group of senior executives and advisers in the automotive industry — also revealed that China, Russia, and India are the top three countries that respondents believe pose the greatest compliance risks. As one respondent noted, “The (Chinese) market is so big and the companies are expanding so fast, that it almost seems like the wild west of the 1880s.”
Miziolek says that before entering a new country, it’s critical to understand the landscape. “You have to be able to figure out how to do business while staying on the right side of the law,” she says. “It’s really about having a robust program that’s not just on papers but its in real life.”
The survey found that only about a quarter of companies employ in-house experts who concentrate on privacy and security changes.
Other significant conclusions determined by the survey included:
- Court disputes. Supply chain litigation (52 percent), IP litigation (46 percent) and warranty litigation (39 percent) were the top three types of litigation faced by respondents’ companies over the last year.
- Counterfeit goods. Although the U.S. automotive industry witnesses an estimated $12 billion per year in trade of counterfeit automotive parts, only half of respondents have taken specific steps against counterfeiting, including customs enforcement and litigation, to protect their brand, and only a few plan to do so in the next year.
- Compliance deadlines. Respondents ranked conflict minerals lowest in terms of global compliance concerns. However, automotive manufacturers are seriously addressing near-term compliance deadlines to meet the standards of the Conflict Minerals Act (a rule that requires public companies to publicly disclose whether the sourcing of conflict minerals in their products benefited armed groups responsible for human rights violations).
- â€‹Sixty-eight percent of respondents would consider not working with a supplier if it indicated products contained or likely contained conflict minerals, and 64 percent would consider not use a supplier if it did not comply with a conflict minerals request. At the same time, the response to the survey question regarding the percentage of their Conflict Mineral Act compliant suppliers reveals many are still not compliant and/or the OEMs do not yet know whether their suppliers are compliant.