Automotive and auto components
Know what each part earns after the OEM has finished adjusting the price
An auto-component supplier's margin is negotiated with the vehicle maker, then revised by price-downs, indexation, warranty debits and payment deductions for months afterwards. We reconcile each of those to the part number it belongs to, so you can see what every part earns once the adjustments have landed.
The price after the OEM adjusts it.
Piece price → price-downs, indexation, debits → what the part earns
At a glance
Retrospective price-downs and indexation settlements are booked in bulk, never reconciled to part numbers and quantities.
Price and recovery
Contribution by part number, programme and customer.
7 trades
Each trade runs on different numbers, so each has its own page
Open the one that matches your business. Each sets out how the money moves, where it usually breaks down and what we would do first.
The economics
Why the numbers are harder here
Component suppliers sell to a small number of vehicle makers and tier-1s who set the terms: a piece price fixed at nomination, annual productivity reductions, raw-material indexation on the customer's formula and lag, tooling paid through a lump sum or the piece price, and quality and warranty costs recovered by debit. Many of these changes apply retrospectively, so the price of a part supplied in April may not be settled until September.
Cash follows the customer's systems rather than your invoices. Payment is triggered by goods-receipt, schedules change weekly, stock sits in consignment warehouses beside the assembly line, and deductions arrive with little explanation. Meanwhile the shift to electric vehicles is changing which parts are needed at all, so suppliers are investing in new programmes while their existing ones are squeezed.
The problem
Where visibility breaks down
- Retrospective price-downs and indexation settlements are booked in bulk, never reconciled to part numbers and quantities.
- Raw-material indexation recovers less than the actual cost increase, and the gap is not measured.
- Warranty and quality debits are deducted from payments and accepted without being tested.
- Customer-funded tooling is not tracked to what has actually been recovered.
- Dedicated capital for a programme is not compared with the volume the programme delivered.
Where we concentrate
How we focus the engagement
Price and recovery
- A price history for every part number, with each revision reconciled to the period and quantity it covers.
- Indexation recovered compared with actual input cost movement, by customer and quarter.
- Warranty, quality and line-stoppage debits matched to the part and the evidence behind them.
- Customer-funded tooling recorded with its recovery status.
- Supplementary invoices and credit notes issued on time and consistent with GST requirements.
Cost, capacity and cash
- Part-level costing on current cycle time, scrap, tooling and material, re-run before each price review.
- Programme profitability, including the capital bought for it.
- Goods-receipt, invoice and payment reconciliation by customer plant.
- Consignment and free-issue stock reconciled at both ends.
- Working capital by customer, against their actual payment behaviour.
Reporting
Reports worth receiving
- Contribution by part number, programme and customer.
- Indexation recovered against actual cost movement.
- Warranty and quality debits accepted, contested and reversed.
- OEM receivables by cause of delay.
- Programme volume and capital recovered against nomination.
Common questions
Questions we hear in this sector
How is this different from your manufacturing work?
The costing discipline is the same, but automotive adds a layer of customer-controlled pricing — price-downs, indexation, tooling and warranty recovery — that has to be reconciled part by part. That reconciliation is usually where the margin is lost.
Can you help us prepare for an OEM commercial review?
Yes. We put together part-level cost, indexation gaps, tooling recovery and debit history, so your commercial team goes into the review with evidence rather than estimates.
Do you work on production-linked incentive claims?
We prepare and maintain the sales, value-addition and investment data a claim relies on. The claim is your own filing, and any auditor's certificate the scheme requires is signed by an independently engaged CA.
5th Quadrant performs costing, reconciliation, control and reporting work, and prepares data for government incentive claims. The claim filing is the client's own responsibility; statutory audit, tax-audit reports and any certificate a scheme requires are signed by an independently engaged licensed professional, coordinated through 5th Quadrant. Full detail is on our Professional Scope page.
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