Toronto, Ontario — Last week, Milwaukee, Wisconsin law firm Foley and Lardner released a report on what it believes to be the top legal issues facing the automotive industry in 2020, outlining incoming emerging technologies, warranty risks, cybersecurity challenges and more.
Foley’s report says the intense focus on autonomous vehicles and electrification seen in today’s automotive industry shows no signs of slowing down—in the new automotive industry, every company is a tech company.
Conversely, as these technologies begin to move along the supply chain, automotive companies need to address several important issues, such as protecting the supply chain from warranty issues, cybersecurity and data privacy, consumer expectations and more.
Protecting the supply chain
As the industry shifts from human drivers toward some level of autonomous driving, managing warranty risks associated with electrical system components and software will be key in the industry, says the report.
To mitigate warranty risks, Foley suggests addressing risk management concerns during the contracting phase. Nowadays, with the integration, new technology and joint development, suppliers can appropriately allocate risk according to responsibility. Specifications for components or systems should be clearly set forth in contract documents, and efforts should be made to limit or disclaim and inapplicable warranties, including those outside the scope of design or integration responsibility.
Foley and Lardner’s report also suggests that automotive suppliers clearly document responsibilities for testing electrical system components, systems and networks, while also clarifying the limits of their responsibility for such testing—at the component, system and vehicle levels.
Finally, the report suggests addressing warranty issues as promptly as possible. If an issue arises, the supplier should aim to identify the root cause(s) as quickly as possible, implement containment procedures, and establish clean points.
In addition, protocols should be established for handling warranty claims and analyzing the root causes of dealer repair codes that could implicate the product.
Cybersecurity and data privacy
Ransomware attacks have reared their ugly heads in Canada’s automotive landscape recently. Foley’s report says the automotive cybersecurity market is expected to grow at an unprecedented rate in the coming years—from $1.34 billion in 2018 to $5.77 billion by 2025.
Cybersecurity should definitely be on your mind—according to a recent survey for Synopsys and the Society of Automotive Engineers International, manufacturers say it is “likely” or “very likely” that malicious attacks on software and other components will occur within the next 12 months.
Breach of applicable agreements, documentation of root cause(s) and documentary evidence supporting the damages are critical should a ransomware attack arise.
Consumer expectations
As consumers become more aware of their data and more concerned with their privacy, they are demanding greater transparency, protection and control over personal information, says Foley’s report.
Smart technology increases the amount of personal information vehicles collect, making strong data protection protocols of paramount importance. And, just like a cybersecurity breach may signal to consumers that their data is not safe, a company’s breach of applicable data privacy regulations could send a similar message.
Foley’s report suggests that companies make privacy a priority, and make that priority obvious to consumers.
“With this shared interest as a foundation, companies should additionally be transparent about their privacy policies and practices and should engage with consumers’ questions or concerns,” reads the report. “Cultivating this kind of trust is crucial as connective and autonomous innovations and privacy concerns continue to grow.”
Canadian bodyshops have recognized an increase in consumer expectations regarding the end stage of their vehicle repairs. Tyler St. Martin, a technician at Assured Allards in Kanata, Ont. recently told Collision Repair that, with tech ramping up the price of some of today’s more advanced vehicles, he’s noticed a change in consumer behaviour.
“Everyone is a little savvier nowadays and has a particular vision of how things should look when the job is done,” said Tyler. “People are paying huge money for these cars, so it’s about more than a method of transportation to them—their cars are their babies.”
Foley’s full report covers an extensive list of the legal challenges it believes are facing the automotive industry, including key issues facing employers, challenges introduced by USMCA, and what the 2020 U.S. election could mean for the North American sector.
For the full report, click here.
