As a result of variable raw material prices and the necessity for manufacturers to stay up with industrial and technical improvements, the costs associated with producing automobiles continue to climb. Moreover, many manufacturers emphasize cost-cutting to improve their viability, sustainability, and total profits.
This is especially true for businesses involved in trading (import & export) the automotive product or vehicle as a whole.
If you also ended up reading this article because you are worried about surging automotive industry overheads, you have come to the right place. In this article, we’ll discuss some practical measures to save money. So, let’s begin!
Implement Remote Software Updates
According to a report, in 2022, enabling wireless, over-the-air software updates for telematics and infotainment systems has the capacity to save the auto industry as much as USD 30 billion (in States alone). This approach to remote software upgrades costs a lot less than updates carried out via a cellular network.
Any vehicle with built-in Wi-Fi capability is capable of receiving over-the-air software upgrades, which will lower warranty costs, improve the efficiency of software recalls, and generally make it simpler for consumers and manufacturers to keep their software up to date. Additionally, this will lower OEM costs and raise the value of cars and related goods.
Many businesses are using this tactic to save costs and increase company efficiency. Studies have also shown that this might become the standard norm in the coming few years. So, it would be best for you to be ahead of the curve.
A business can also upgrade its shop management software internally so that tasks like remote updates to vehicles can be streamlined. Various office tasks, such as scheduling appointments, invoicing customers, and tracking inventory, can also be automated. This can save time and reduce the need for manual labor, increasing efficiency and lowering costs.
A good management software program typically has cost-saving tools, which help to identify suppliers with lower prices or opportunities for bulk purchasing. Some even have features that track employee productivity and performance, which can help the business address inefficiencies and reduce waste.
Using Duty And Tax Recovery To Your Benefit
Did you know that the majority of firms miss out on a sizable sum of money each year by failing to utilize tax deductions and duty recovery? In fact, according to a study, at least one in five corporate decision-makers weren’t sure if they made the most of tax breaks and incentives.
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However, those who took advantage said it had a big impact. According to the survey, businesses that made use of all the incentives and deductions saw ‘somewhat-to-substantial’ improvements in their financial standing during 2021.
That’s not all; some automotive companies, especially those working in import and exports, are not aware of the fact that they are overpaying their duty. According to duty drawback experts, companies can use drawbacks to get back the duties, taxes, and fees they pay on imported goods that are then exported in a similar state, processed, or built into a finished product. These products (automotive in this case) are then exported or destroyed under customs supervision.
In reality, only a small portion of the taxes paid to the government are refunded. Many businesses are simply unaware of their ability to recover duty or how to do so. However, you can file a claim to put money back in your pocket.
Of course, you need to work with professionals to recover the duty, so you must find a qualified and credible team.
Minimize Overall Material Costs
The high cost of raw materials, which makes up over half of the total cost of producing a car, is one of the major cost drivers in the automotive industry. Because of their reliance on certain raw materials, particularly steel, the auto industry is more susceptible to price increases and worldwide market changes.
To overcome this, producers should look around for suppliers who would give them the greatest price rather than just sticking with their established supplier connections. This includes looking at the international level.
Not to mention, lowering the cost of materials will become even more crucial as the industry moves towards the use of aluminum, which is twice as expensive as steel but significantly more lightweight. As a result, auto manufacturers should set priorities, make procurement decisions, and start negotiations with the dealers right away.
Purchase Basic Supplies In Bulk
Buying necessary materials in bulk is a smart method to reduce upfront prices and ongoing costs. These should be goods you frequently utilize, as buying less-used items in bulk means investing money ahead that could have been better spent on other expenses.
For instance, O-rings are one indispensable tool you’ll frequently use each day when your business is open. You may significantly reduce the price of your o-rings overall, saving you money over time, by creating a dependable supply chain that enables bulk purchases.
A well-stocked inventory of common parts reduces the possibility of running out and having to delay providing service to your clients.
The Bottom Line
These are some effective ways in which you can save money on your automotive business. So, you must try these measures to elevate the revenue and lower the costs.
