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Study Shows Shape of Things to Come in the Auto-Industry
01 Aug 2004
The global automotive industry is evolving in ways that will result in the industry's suppliers, not the automakers themselves, conducting some 80% of automotive R&D and production by the year 2015 (compared with 63% now), as automakers restrict their own share of production to those components that are crucial to the success of their brands. Automakers who hesitate to change their existing development and production structures will be at a serious competitive disadvantage over the next decade.
This projection is one of several noteworthy conclusions contained in a far-reaching study (Future Automotive Industry Structure 2015) conducted by Mercer Management Consulting, the Fraunhofer Society for Production Technology and Automation, and the Fraunhofer Society for Materials Management and Logistics. The study combined interviews with 60 highlevel decision-makers at automakers, suppliers, and service providers with an analysis of industry data to produce economic models of the evolving structures of development and production in the industry. It reveals that new business designs for the industry are emerging that are driven by new forms of cooperation between suppliers and automakers.
"One of the key findings of our study is that brand image has become as important as performance and price for automakers, " says Ralf Kalmbach, a managing director of Mercer Management Consulting and head of the firm's automotive industry practice. "They will increasingly be focusing on brand-specific elements such as design, customer experience, and service strategies." Consequently, the roles now played by the automakers and their suppliers can be expected to change significantly as automakers evolve into high-tech brand merchandisers and their suppliers gradually take over automobile production activities that are unrelated to the brand experience (e. g. chassis or power train).
The Mercer/Fraunhofer study predicts that value creation in the automotive supplier sector will increase 70% over current levels by the year 2015, with automotive suppliers creating an additional 3.3 million new jobs worldwide (to a total of 9.2 million jobs) to accommodate this growth. The study's findings indicate that electrical systems and electronics will benefit most from this surge, with the value of electrical systems and electronics in the average automobile rising to $5,180 from its current value of $2,775.
By simulating the influence of these new forms of collaboration in the framework of an industry business model, the researchers were able to determine that a cost savings of between $750 and $1,250 per vehicle is possible.
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