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Industrie 4.0

Targeted control by the automotive industry

German automotive manufacturers and suppliers are too slow in making structural preparations for the age of electromobility and digitalization. What is needed is major budget changes, greater innovation and a more systematic approach.

18 May. 2018
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Targeted control by the automotive industry (Photo: Bain & Company)

This is the finding of a study by the Bain consultancy. The headline: "End of the experiments." It’s the second alarm study in quick succession. Almost simultaneously, Roland Berger issued a warning titled "Storm coming?" advising that key industries must not put off making structural changes forced upon them by digitalization.

In concrete terms, according to the Bain authors, the German automotive industry would have to invest up to 30% of their research and development budget into fundamentally realigning their business by 2020 in order to defend their global leading position – and this in the face of growing cost pressure. What may sound like trying to fit a square peg into a round hole is still possible, according to the consultants. But managers would have to clearly define what topics they want to focus on in the future, and which ones they can afford to stop concentrating on.

Nevertheless, the picture the study paints of today’s reality is different: While the engineers are overwhelmed with compartmentalized new developments and pilot projects, managers in research and development are not consistently taking advantage of more efficient development. Bain suggests that a new innovation strategy could consist of the following four steps: First, the input for research and development would have to be formulated, then a development portfolio defined; next, appropriate methods and processes would have to be selected; and finally, the change must be controlled. However, this would require courage and pragmatism.

Another option to bring innovation into the company: startups. Automotive manufacturers and suppliers, however, are still hesitating. According to a representative Bitkom survey from October 2017, 56% do not collaborate with new companies. Only 7% purchased products or services from them, and a mere 2% had invested in startups. Smaller companies especially lack contact with innovative entrepreneurs.