This will be accompanied by structural changes in the auto industry’s R&D departments. OEMs will only slightly increase their R&D spending. While Western car manufacturers will cap their R&D investments, OEMs from China, India and South Korea will boost their spending on innovation.

Overall, the supplier sector and engineering service companies will be the winners of this development with additional R&D spending of EUR 20 billion in 2015 (in 2005: EUR 46 billion). The concentration process in the supplier industry will improve innovative strength and networking opportunities with other partners – another way of cutting costs while increasing the quality of innovations.

Oliver Wyman has analyzed the innovation strategies of the industry’s most successful auto companies. The study “Car Innovation 2015” identifies the levers that car manufacturers and suppliers must pull to become state-of-the-art innovation leaders.

Depending on the business design of the supplier and OEM, four dimensions must be brought into alignment: innovation proposition, competence focus and collaboration, innovation business case, and innovation organization and structure. The leading suppliers in innovation management generate a 16 percent higher EBIT margin than their peers – all by employing a clear innovation strategy and balance along those four dimensions.

• Increase customer orientation and marketing focus on R&D
• Generate a diverse innovation product & services portfolio
• Improve R&D effectiveness and efficiency; reduce innovation risks
• Enhance the innovation culture and organization
• Align innovation strategy according to Oliver Wyman’s “Innovation Strategy Framework”

The changing role of innovations in the automotive industry

Dear Reader, In 2001, Mercer Management Consulting (now Oliver Wyman) published a comprehensive study titled “Automotive Technology 2010.” Since then, this study has become the basis for many strategy discussions in the industry and inspired many of our automotive consulting projects. Six years later, the new study, “Car Innovation 2015,” continues this trend-setting work and expands the technological perspective to all aspects of innovations, not just the technological ones.

“Car Innovation 2015” analyzes the complete framework of automotive innovations: societal and governmental influences, technology trends, the voice of the customer, innovation economics, and innovation management and strategies. For more than nine months, over 30 experts at Oliver Wyman have contributed to “Car Innovation 2015.”

The study comprises an in-depth expert poll, a consumer panel, a strategic choice analysis, a thorough analysis of more than 300 innovations, a car dealer field study and intensive database research.

This brochure introduces the five topics that “Car Innovation 2015” addresses: megatrends, technology, customer, business, strategy and organization. It also contains recommendations and areas of action involving innovation management at automotive suppliers and car manufacturers. During 2007, we will publish special brochures covering each chapter – and, of course, there will be in-depth company presentations by Oliver Wyman experts to those interested in realizing some of the ideas presented in the study.

Yours truly,
Jan Dannenberg and Jan Burgard
Oliver Wyman
Automotive

Download 2015 Car Innovation: A comprehensive study on innovation in the automotive industry

PDF format, 954KB, 32Pages. Published by Oliver Wyman.

Contents:
Executive Summary 4
Oliver Wyman’s “Car Innovation 2015” study

Megatrends: Innovation Focus 6
Envision the long-term chances of innovations
Cars for an aging population
New cars for megacities
Determine your individual innovation focus

Technology: Innovation Potentials 10
Recognize technology chances and manage the risks
“Car Innovation 2015” technology roadmap
Chances of and threats to hybrid power trains
Choose and manage the right innovation projects

Customer: Innovation Acceptance 14
Include the customer’s perspective
Why innovations fail in the eye of customers
Assessing the take rate of optional equipment
Build customer understanding

Business: Innovation Economics 18
Keep the system from collapsing
Basic figures on R&D
The chances of low-cost designs
Innovate your assembly concept
Devise R&D activities to meet the cost agenda

Strategy and Organization: Innovation Management 22
Create an “Innovation Strategy Framework” that suits your needs
OEM example: “Architectural revolutionizer”
Supplier example: “System connector”
Check your “Innovation Strategy Framework”
Ten success factors
Areas of action for innovation managers

Innovation Consulting 30
Five consulting services in innovation management

About Oliver Wyman:

Oliver Wyman is a leading global management consultancy, combining deep industry knowledge with specialized expertise in strategy, operations, risk management, organizational transformation, and leadership development. The firm works with clients across a range of industries to deliver sustained shareholder value growth. We help managers to anticipate changes in customer priorities and the competitive environment, and then design their businesses, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities.

Oliver Wyman’s thought leadership is evident in our agendasetting books, white papers, research reports, and articles in leading external publications.

The firm’s capabilities and intellectual capital are enhanced by our deep industry expertise, geographic range, analytical rigor, and hands-on, collaborative approach. Our professionals see what others do not, challenge conventional thinking, and consistently deliver innovative, customized solutions. We also work side by side with senior executives to accelerate execution through a blend of behavioral and management approaches. As a result, we have a tangible impact on clients’ top and bottom lines.

For further information, please contact your local Oliver Wyman office or visit our web site at: www.oliverwyman.com

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