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Accelerating the speed of finance

Constantly moving customer expectations, fueled by innovations from players outside and in, are challenging how the 100-plus-year-old automotive industry approaches every new finish line; old models of doing business no longer suffice.

In a conversation with Brian Peccarelli, president of Thomson Reuters Tax & Accounting business, Matt Carpenter, chief financial officer of Audi of America and Audi of Canada, shared how his finance organization is embracing this moment in time and accelerating its clock speed to drive better value propositions for Audi’s customers.

Brian Peccarelli: What do you see as the biggest challenge for an automotive company Chief Financial Officer (CFO) over the next five years?

Matt Carpenter: A lot of different industries are experiencing a rate of change that  most  of  us have not seen before. When you look at what’s available to consumers, how connected they demand to be in all facets of their lives and how they consume, everything has changed.

As a result, we can expect changes to the way we have to deliver on increasingly elevated customer expectations. Our resource allocation and our investment strategies have to keep pace with the marketplace. We have to address and prepare for business lines and products and services that don’t exist yet. That has a pretty profound impact on the CFO office.

Peccarelli: How are the changes affecting your decisions now, both in terms of investing in automotive technology as well as building the operating model of the future?

Carpenter: It starts with the consumer, and their expectations have been shaped by some powerful innovations. Apple®, for example, has basically revolutionized the area of personal connectivity, and that’s resetting customer expectations for connectivity in the vehicle.

Amazon has basically redefined the expectations for speed and selection. And Uber and Lyft have delivered highly disruptive models that have reset the standard hailing of a ride. It’s all changing and improving and, as a guy in a consumer-focused industry, I love that.

At Audi, we embrace change because it means we provide a better value proposition for our customers. What you’re seeing in the industry is the pilot phase of a series of new business lines. Trends like subscription services, ride hailing, vehicle-on-demand, all of these alternative, “non-ownership ways” to move people.

Peccarelli: Changes from the consumer side are moving at an unprecedented speed. I look at an automobile today, and it’s a computer on wheels. Given that, how is that changing  the thinking  from  a  supply-chain  perspective and the partners you’re dealing with?

Carpenter: Traditionally, in a 100-plus-year-old manufacturing model, very few Tier 1 suppliers have been in front of the curtain. Now, you’re seeing this shift and many  suppliers  are  actually  in  front  of  the  curtain  with us, especially in some areas like personal connectivity.

Apple is a good example with CarPlay. In the future, in a world with more electric vehicles and increasingly autonomous capabilities, suppliers will be providing technologies for batteries and piloted driving  that will have a significant impact on the decisions consumers make.

In managing a partnership ecosystem, we need to continue holding our strategic supplier partners to the same very high engineering standard as we’ve always held ourselves to at Audi – with engineering, of course, being core to our global DNA.

As it relates to the workforce, now we have to solve for different consumer demands. As a result, we need to build more internal capabilities in the areas of connectivity, safety and media interfaces. These are very, very important features that will become the cost  of doing business with the consumer.

Externally, we need to make sure that we have appropriate business and brand fits for the vision of the final product that we put in front of the consumer. Software engineering gets more important. Telematics have been important for years but have an exponential curve. And with battery technology, when you’re trying to solve for a new power source in an infrastructure that’s still under development, considerations like range are going to be super important for a customer who’s not quite sure.

We’re going to have to build internal and partner expertise that, most importantly, delivers for the customer.

Peccarelli: Given the globalized nature of today’s auto industry, how much of your job is about currency and commodity price risk?

Carpenter: Macroeconomics will continue to be incredibly important to our long-term planning as a global company, with ambition to be global leaders. Audi of America is part of the broader worldwide organization Audi AG, which is part of Volkswagen Group AG.

We have experts in the areas of currency management and commodity pricing risk. Even when it gets into trade agreements and tax reform, we have experts worldwide across the entire organization who attend to these things on a daily basis. At Audi of America, we provide local market expertise, knowledge and inputs into a multi-year business planning process. Overall, our focus is on the short-term delivery on our goals, business objectives and promises to our customers.

Peccarelli: What do you anticipate will be the most disruptive trend that financial professionals across all industries will be facing in the next two to three years?

Carpenter: As a finance community, we need to learn every day. I wouldn’t say we have the whole thing figured out quite yet. I’m inspired by my colleagues within the company and my peers outside of the company because I do think the degree of change in internal business management is starting to keep pace with the marketplace. Of course, we all have personal blind spots, but collectively, as a finance community, the clock speed of finance, so to speak, is being addressed in meaningful ways. Most importantly, very experienced and intelligent people are talking about it more openly. And in today’s rapidly evolving world, all ideas are worth the discussion.

One of the challenges is making sure that our processes, which serve as guardrails for our business, can move at the same speed as the marketplace. We need to keep up with not only our customers, but also with our business partners within our organizations. What I’ve always committed to the Audi team is that neither I nor the Audi finance community will slow down our agility to deliver for our customers.

If that means we need to look at alternative ways to manage our business, do our financial planning and evaluate new business models, then we accept that challenge. Although we’re still learning, every time a new opportunity presents itself, we’re taking this very, very seriously. We’re not just doing things in the ways they’ve traditionally been done. I spend a lot of time speaking with industry colleagues, and I pay attention to what’s going on with our customers. I think that’s very important.


Meet the interviewee

Matt Carpenter is vice president and chief financial officer for Audi of America with responsibility for the financial planning, steering, controlling, reporting and target achievement. He also serves as CFO of Audi Canada. Carpenter’s most recent role at Audi of America prior to becoming CFO was general manager, Vehicle Sales, responsible for new and pre-owned sales for the Audi brand in the U.S. from 2011 until 2015. He joined Audi of America in 2007 as a business management consultant in Auburn Hills, Michigan.

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