Welcome!

News Feed Item

Automotive Industry Is Entering a New Golden Era of Innovation

Regulatory Mandates, Changing Consumer Expectations, and Technological Advances Are Driving Increasing Innovation, According to New Research by The Boston Consulting Group

DETROIT, Jan. 13, 2014 /PRNewswire/ --The global automobile industry is entering a new golden era of innovation and advancement, and the ability to innovate in four key areas—power train, lightweight materials, connectivity, and active safety and assisted driving—will be a major factor in individual carmakers' success in the years ahead, according to new research by The Boston Consulting Group (BCG).

(Logo: http://photos.prnewswire.com/prnh/20140113/NY44617LOGO-b )

The research, released today during the press preview of the North American International Auto Show in Detroit, draws on several sources, including the results of a new U.S. consumer survey, an analysis of patent filings, BCG's annual study of the world's most innovative companies, and the firm's experience working with major automotive companies around the world. The findings will be published in a BCG report later this month. Here are a few highlights:

Innovation in the global automotive industry is intensifying.

  • Fourteen automakers are among the top 50 most innovative companies in BCG's 2013 survey, compared with 10 carmakers in 2012 and only five in 2005. Three companies (Toyota, Ford, and BMW) rank in the top 10, and nine automakers are in the top 20. For the first time since BCG began conducting this survey nine years ago, there are more auto manufacturers than consumer companies in the top 50 and more carmakers than technology companies in the top 20.
  • R&D spending at these 14 original equipment manufacturers (OEMs) increased at an annual rate of 8 percent since 2009, while spending at leading tier-one suppliers[1] rose by 5 percent a year.1
  • From 1995 through 2011, the number of patent applications filed by OEMs increased by only 3 percent annually, while the number of filings by tier-one suppliers rose 6 percent a year. A recovery from the 2008 crisis has resulted in the number of applications by tier-one suppliers leaping 37 percent, while the number by OEMs has jumped by 28 percent.

The focus on innovation has been in four areas: power train, lightweight materials, connectivity, and active safety and assisted driving.

  • The four areas had patent application growth rates of 6 to 15 percent from 1995 through 2011, compared with an average growth rate for all patent filings by OEMs and tier-one suppliers of only 4 percent.
  • Filings in all four areas showed only an 8 percent decline from 2008 through 2009, compared with an average drop in the number of applications of 25 percent.
  • Filings increased 10 percent faster than the average growth rate in the bounce-back years from 2010 through 2011.

Consumers value the introduction of new technologies and features.

  • New BCG research on U.S. consumers shows that most car buyers want to purchase a car from a company seen as innovative—almost 60 percent say this is a very or somewhat important consideration.
  • A key characteristic of an innovative automaker, according to car buyers, is being the first to introduce new technologies.
  • U.S. consumers see features related to connectivity, safety, and fuel economy as the most innovative in today's vehicles. Most U.S. consumers rank connectivity and safety features in the top 5 of some 20 new features in vehicles today (see exhibit).

(Photo: http://photos.prnewswire.com/prnh/20140113/NY44617-INFO-a )

"Innovation in the automotive industry is retaking center stage," said Xavier Mosquet, a BCG senior partner and coauthor of the study. "Consumers want to buy cars from companies that bring new technologies to market, and connectivity, safety, and fuel efficiency are three of their top priorities. The ability to innovate in these areas will be a major factor in individual automakers' success in the coming years."

Regulatory and marketplace demands with respect to fuel efficiency, connectivity, and safety, as well as technological advances that are making new features possible and reducing their cost, are driving the renewed focus on innovation.

Mosquet, who coleads BCG's global Automotive practice, and his coauthors say that OEMs and tier-one suppliers need to address three areas with a sense of urgency:

  • The shift from mechanical to software-driven vehicles. Cars are no longer primarily mechanical devices. Rather, automobiles are increasingly becoming software driven (literally, as well as in other ways). Given the rise of electronics and the fact that software features reduce tooling cost, as well as allow for configuration later in the product development cycle, the shift to more software in cars will continue. This shift requires auto executives to think about product life cycles—and the involvement of their companies with them—in new terms.
  • The quickening pace of product development. Consumer electronics and technology companies have taught consumers to expect a rapid pace of innovation. This expectation will make it more and more difficult for automakers and their suppliers to adhere to the current three- to five-year product design and development process. Car manufacturers will need to experiment with alternative design processes, new development models, and in the longer term, advanced manufacturing techniques. The ability to discern early what consumers see as the most valuable innovations will also create an advantage.
  • The increasingly prominent role of tier-one suppliers in innovation and technological development. The importance of tier-one suppliers in innovation and product development will escalate. These companies are already playing a bigger role in innovation in the areas of power train, interior design, and chassis components—historically the R&D domains of carmakers. In addition, the determinants for differentiation are shifting toward connectivity and active-safety features, in which tier-one suppliers have substantial expertise. Those manufacturers that construct the most effective collaboration models, encouraging and rewarding supplier R&D investment, will build a long-term advantage.

"Other areas of innovation loom large as well, such as alternative fuels and assisted driving," said Massimo Russo, a BCG senior partner and coauthor of the study. "Those automakers that determine how to organize themselves to harness and direct fast-moving developments in power train, lightweight materials, and, most critically, software, electronic components, and connectivity will establish a decided advantage over competitors in the near and longer term."

A copy of the upcoming report, Accelerating Innovation: New Challenges for Automakers, will be available later this month at www.bcgperspectives.com.

For more information on the research or to arrange an interview with one of the authors, please contact Dave Fondiller at +1 212 446 3257 or [email protected].

About The Boston Consulting Group 
The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 81 offices in 45 countries. For more information, please visit bcg.com.

About bcgperspectives.com 
Bcgperspectives.com features the latest thinking from BCG experts as well as from CEOs, academics, and other leaders. It covers issues at the top of senior management's agenda. It also provides unprecedented access to BCG's extensive archive of thought leadership stretching back 50 years to the days of Bruce Henderson, the firm's founder and one of the architects of modern management consulting. All of our content—including videos, podcasts, commentaries, and reports—can be accessed by PC, mobile, iPad, Facebook, Twitter and LinkedIn.

1 OEMs include Toyota, Ford, BMW, General Motors, Volkswagen, Hyundai, Honda, Audi, Daimler, Kia, Nissan, Tesla, Fiat, and Renault. Tier-one suppliers include Continental, Denso, Bosch, Panasonic, Valeo, TRW, and Hyundai Mobis.

 

SOURCE The Boston Consulting Group

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
SYS-CON Events announced today that Hitrons Solutions will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Hitrons Solutions Inc. is distributor in the North American market for unique products and services of small and medium-size businesses, including cloud services and solutions, SEO marketing platforms, and mobile applications.
Smart Cities are here to stay, but for their promise to be delivered, the data they produce must not be put in new siloes. In his session at @ThingsExpo, Mathias Herberts, Co-founder and CTO of Cityzen Data, will deep dive into best practices that will ensure a successful smart city journey.
DevOps at Cloud Expo, taking place Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long dev...
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - comp...
Kubernetes, Docker and containers are changing the world, and how companies are deploying their software and running their infrastructure. With the shift in how applications are built and deployed, new challenges must be solved. In his session at @DevOpsSummit at19th Cloud Expo, Sebastian Scheele, co-founder of Loodse, will discuss the implications of containerized applications/infrastructures and their impact on the enterprise. In a real world example based on Kubernetes, he will show how to ...
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
SYS-CON Events announced today that Venafi, the Immune System for the Internet™ and the leading provider of Next Generation Trust Protection, will exhibit at @DevOpsSummit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Venafi is the Immune System for the Internet™ that protects the foundation of all cybersecurity – cryptographic keys and digital certificates – so they can’t be misused by bad guys in attacks...
Is the ongoing quest for agility in the data center forcing you to evaluate how to be a part of infrastructure automation efforts? As organizations evolve toward bimodal IT operations, they are embracing new service delivery models and leveraging virtualization to increase infrastructure agility. Therefore, the network must evolve in parallel to become equally agile. Read this essential piece of Gartner research for recommendations on achieving greater agility.
As the world moves toward more DevOps and Microservices, application deployment to the cloud ought to become a lot simpler. The Microservices architecture, which is the basis of many new age distributed systems such as OpenStack, NetFlix and so on, is at the heart of Cloud Foundry - a complete developer-oriented Platform as a Service (PaaS) that is IaaS agnostic and supports vCloud, OpenStack and AWS. Serverless computing is revolutionizing computing. In his session at 19th Cloud Expo, Raghav...
DevOps at Cloud Expo – being held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's largest enterprises – and delivering real results. Am...
Fact: storage performance problems have only gotten more complicated, as applications not only have become largely virtualized, but also have moved to cloud-based infrastructures. Storage performance in virtualized environments isn’t just about IOPS anymore. Instead, you need to guarantee performance for individual VMs, helping applications maintain performance as the number of VMs continues to go up in real time. In his session at Cloud Expo, Dhiraj Sehgal, Product and Marketing at Tintri, wil...
Ixia (Nasdaq: XXIA) has announced that NoviFlow Inc.has deployed IxNetwork® to validate the company’s designs and accelerate the delivery of its proven, reliable products. Based in Montréal, NoviFlow Inc. supports network carriers, hyperscale data center operators, and enterprises seeking greater network control and flexibility, network scalability, and the capacity to handle extremely large numbers of flows, while maintaining maximum network performance. To meet these requirements, NoviFlow in...
StarNet Communications Corp has announced the addition of three Secure Remote Desktop modules to its flagship X-Win32 PC X server. The new modules enable X-Win32 to safely tunnel the remote desktops from Linux and Unix servers to the user’s PC over encrypted SSH. Traditionally, users of PC X servers deploy the XDMCP protocol to display remote desktop environments such as the Gnome and KDE desktops on Linux servers and the CDE environment on Solaris Unix machines. XDMCP is used primarily on comp...
SYS-CON Events announced today that StarNet Communications will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. StarNet Communications’ FastX is the industry first cloud-based remote X Windows emulator. Using standard Web browsers (FireFox, Chrome, Safari, etc.) users from around the world gain highly secure access to applications and data hosted on Linux-based servers in a central data center. ...
SYS-CON Events announced today that eCube Systems, a leading provider of middleware modernization, integration, and management solutions, will exhibit at @DevOpsSummit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. eCube Systems offers a family of middleware evolution products and services that maximize return on technology investment by leveraging existing technical equity to meet evolving business needs. ...