An open question coming into 2017 was whether the aggressive enforcement posture that had characterized the Obama and Bush administrations would continue under the Trump administration. Any questions were answered with the announcement of the first billion-dollar export controls penalty at the outset of the new administration. With the Trump administration continuing to aggressively pursue anti-money laundering, economic sanctions and Foreign Corrupt Practices Act antibribery enforcement actions, companies acting in the international realm, especially those within the automotive sector, are well-advised to take all available steps to ensure that their international regulatory compliance is in good shape.
What is a consequential damage?
This is the million (sometimes multimillion) dollar question. According to Black’s Law Dictionary, consequential damages are “losses that do not flow directly and immediately from an injurious act but that result indirectly from the act.”
Elevated warranty expenses for Original Equipment Manufacturers (OEMs) are expected to continue in 2018, and automotive suppliers can expect to continue paying a greater per-vehicle share of these expenses. Because OEM purchase orders and corresponding terms and conditions contain highly OEM-favorable language, exceptions and limitations to supplier warranties are difficult to negotiate.
On March 1st, the automotive sectors that consume steel and aluminum were confronted with a potentially large tariff rate increase. The section 232 measures are intended to raise the prices of all steel products – whether imported or domestic – and thus will have an impact on any major purchaser of steel, which includes most automotive companies. Further, many of the parts and components that the OEMs purchase are made from domestic- and foreign-sourced steel and aluminum parts, meaning that the announcement will have a ripple effect on the entire automotive sector.
As the economy has improved and unemployment has fallen in the nearly 10 years since the Great Recession, North American vehicle sales volumes have also steadily increased and the forecast remains strong for 2018. Bloomberg estimates that approximately 16.7 million vehicles will be sold in 2018, with the majority being light trucks and sport utility vehicle.