The automotive industry is massively globalised and highly complex. Raw materials sourced from multiple producers are manufactured into thousands of different components for different vehicle models. Next, the finished components have to be assembled into their constituent parts and only then can the actual vehicle be built and moved into distribution. Each of these stages requires financing, and may be taking place in multiple countries, subject to multiple banking and finance regulations.
For every item of raw material, every component, every part, every vehicle, every dealer order, every purchaser customisation, there is a need for:
- Pre-shipment finance when an order is confirmed
- Post-shipment finance in the form of invoices
- Payment approval and the application of available or appropriate incentives or penalties
- Distributor financing
- Receivables financing, and much more
This is the tipping point for the banks, which must evolve to meet the needs of Industry 4.0 to remain relevant or risk additional competition from manufacturers launching their own standalone financial services.