United Kingdom

Details

  • Service: Advisory, Transactions & Restructuring, Joint Ventures
  • Industry: Automotive, High Growth Markets
  • Type: Business and industry issue, Video
  • Date: 29/10/2013
  • Length: 1:50 Minutes

Achieving growth in the automotive sector 

Text version:

Joint ventures are really hotting up at the moment.  Many companies are struggling to access growth in traditional home markets.  There is a limited ability to grow in the west and in the UK, so our clients are looking overseas to places like the BRIC countries or to the East, to access growth opportunities.

 

In the automotive sector it’s certainly ripe for joint sectors at the moment. A lot of our automotive clients are seeing reduced car sales in home markets and in Western markets, so there is an absolute need to access growth.  This can be achieved obviously through joint ventures and alliances.  One of the issues is obviously around IP protection and how you achieve that but actually it is possible.  By thinking about where the IP really comes from, (so the R&D, the design, the testing), by retaining that in-house you’re actually able to protect a lot of the IP by handing plans across to the Joint Venture partner to do the manufacturing.  You may give the ability to your partner to copy that but then the product will be obsolete after a period of two years so ultimately by keeping the IP in-house your able to access the overseas markets, but also protect your IP for the longer term.  

 

One of the key challenges is around the supply chain where automotive businesses are doing joint ventures in new territories; this can often be overcome by achieving good tax breaks and incentives to bring in the supply chain to make the joint venture a success.

Many companies are struggling to achieve growth in their traditional home countries.  There is limited capacity for growth in the West and a lot of our clients are looking to the East and the BRIC countries to compensate for this, accessing less mature markets, particularly through joint ventures and alliances.

 

Steve Burch, of KPMG’s Global Joint Ventures Practice, explores some key opportunities and challenges for the automotive sector and how joint ventures and alliances, if well planned and executed, can help deliver growth.

 

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Steve Burch

Steve Burch

Global Joint Ventures Practice

KPMG in the UK

+44 (0)20 7311 8446

steve.burch@kpmg.co.uk