Changing financing and legal frameworks have accompanied unprecedented economic challenges for the automotive sector.
Many car makers are seeing a change to their business model, as refinancing becomes more expensive. This has reduced the opportunity to use cheap leasing arrangements to subsidise sales. The decline in new car sales has also affected the value of used cars and the stock of cars returned to companies after leasing arrangements expire. Both factors are reflected in balance sheets. Banks to the automotive industry need to reconsider their products and look to opportunities for help from state aid programmes.
More alliances and joint ventures between automotive companies are likely in the future, as the industry attempts to develop cleaner engine technology and to reduce its environmental impact. Such alliances require careful consideration of relevant legal issues.
Linklaters combines acknowledged global expertise in joint ventures with experience of the most important concerns of the automotive industry. These include corporate governance - the balance between keeping a joint venture operational and ensuring that neither party can dominate the other. Another crucial consideration is intellectual property, including cross-licences, the development of IP, rights to newly developed IP and how they can be leveraged, perhaps by sale to a third party.
The current global economy makes employment law a key concern for car makers. In tough market conditions, Linklaters’ ability to negotiate effectively with strong unions gives clients a significant competitive advantage. The emphasis will be on keeping plants running. Here, Linklaters’ cross-border corporate restructuring & insolvency expertise is an invaluable resource when the insolvency of a single component supplier can cause problems for the entire production chain. The firm’s insight into the various insolvency regimes across Europe, the Americas and Asia helps clients to navigate this issue and to find practical, robust approaches to safeguard the production chain.
To discuss legal issues with Linklaters’ global automotive team, please contact sector leaders Rüdiger Thiele, Stephan Oppenhoff or Simon Poh.
Recent automotive transactions include advising:
- Volkswagen AG on its US$19bn takeover of German truck and bus manufacturer, MAN
- Audi on its acquisition of Italian sports motorcycle manufacturer, Ducati
- PSA Peugeot Citroen on the competition aspects of its global JV with General Motors
- Pang Da on its investment in and JV with Spyker to distribute of Saab cars in China
- Chery Automobile on its JV with General Motors in India
- the lenders in a comprehensive de-leveraging and debt restructuring transaction for the Schaeffler Group
- the lenders on the restructuring of €600m financial indebtedness of Pininfarina, the Italian car manufacturer
- Michelin on its €1.2bn rights issue
- Autometal on its R$454m IPO