Infographic: 2015 Global Innovation 1000: Automotive industry findings

This infographic examines where the automotive industry’s R&D is being conducted – and to determine whether those destinations have changed since our 2008 study.

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The 2015 Global Innovation 1000 study maps R&D spending worldwide. In this year’s study, we wanted to examine where R&D is being conducted – and to determine whether those destinations have changed since our 2008 study, when we first charted the global flows of corporate R&D. To analyze these flows among regions and countries, we researched the innovation activities of 207 companies in 23 countries conducting R&D at 2,041 R&D sites in more than 60 countries. This sample of major innovators accounts for 71 percent of the total Global Innovation 1000 R&D spending.

2015 Global Innovation 1000

Automotive
industry findings

Automotive industry R&D spending grew by 4.5% from 2014 to 2015

$109bn $70bn
89 71 2005 2010

2015

post-crisis dip
99 87 103 105 109

86 70 68 74

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

China’s share of total automotive R&D has jumped dramatically
In 2007, R&D spending by automotive companies in China made up just 4% of total automotive R&D outlays. In 2015, China’s share had risen to 11%.
2015 total spend

US $99bn
2007 total spend
Rest of the World 14% Brazil 2% Canada 2% UK 2% South Korea 3% India 3% France 5%

US $76bn
Rest of the World 13% Italy 2% Sweden 2% Australia 2% South Korea 3%

China 11%

China 4%

UK 4% France 9% Germany 15%

Germany 15%

Japan 15% Japan 16%

USA 27% USA 29%

Automotive companies rank #3 in cash outlays
When you take a look at how much automotive companies spend as a percentage of revenues, software & internet leads the pack. Their R&D intensity is more than triple that of the automotive industry.

Percentage of the total R&D spend for all sectors

R&D intensity (R&D spend as a % of revenue) by sector

13.8% 24.5%
Computing & electronics

Software & Internet

11.1% 21.3% 6.9%

Healthcare

Healthcare

Computing & electronics

4.0% 16.1% 11.2% 11.1% 6.2%
Automotive

Aerospace & defense

4.0%
Software & Internet

Automotive

2.4% Industrials 1.5% Consumer 1.4% Telecom 0.9% Chemicals & energy 1.2% Other

Industrials

Chemicals & energy 3.3% Aerospace & defense 3.0% Consumer 1.8% Telecoms 1.5% Other

…but being great at innovation takes more than cash
We asked survey participants which companies they believe are the most innovative to create our 10 Most Innovative companies list. Their responses and our list of Top 10 R&D Spenders match less often than you might expect. Indeed, Toyota has been the only automotive company to ever make both lists – in 2010-12, and again in 2015. From 2013 to 2015, Tesla Motors has made the 10 Most Innovative list, despite investing far less on R&D than the industry’s biggest spenders.

2015 – Top 10 R&D Spenders Volkswagen Samsung Intel Microsoft Roche Google Amazon Toyota Novartis Johnson & Johnson
$15.3

2015 – 10 Most Innovative
$6

Apple Google Tesla Samsung Amazon 3M

$14.1

$9.8

$11.5

$0.5 $14.1

$11.4

$10.8

$9.3

$9.8 $1.8 $9.3 $4.2

General Electric Microsoft IBM Toyota

$9.2

$11.4

$9.1

$5.4

$8.5

$9.2

Asia is now the #1 destination for automotive R&D
From 2007 to 2015, Asia has increased the amount it spends on auto R&D by 70%, surpassing North America and Europe to become the largest regional spender of auto R&D. That’s even higher than the overall increase and reflects the shift happening in the industry’s center of gravity.

US $99bn
2007 total spend

2015 total spend

RoW

US $76bn
RoW Europe +4%

Europe

+23% N. America

N. America

+70%
Asia Asia

2007

2015

Total Automotive R&D Spend (Domestic & Imported) by Region as a Percentage of Automotive R&D

Auto companies have dramatically increased their exports of auto R&D
Automotive companies now spend far more of their R&D budgets outside of their headquartered countries than in the past. While domestic R&D spending went up by 11% from 2007 through 2015, exported R&D increased a dramatic 42%. That’s significantly more than the increase in the other two largest sectors, computing and electronics and healthcare.
2015 R&D total spend

US $99bn

2007 R&D total spend

US $76bn

59% US$45bn

R&D exported

64% US$64bn

+42%

R&D spent domestically 41% US$32bn

+11%

36% US$35bn

Exported Automotive R&D and Automotive R&D Spend Domestically as a Percentage of Total Automotive R&D

China replaced Germany as the second-largest importer of automotive R&D
US $64bn
Rest of the World 21%

2015 total spend

US $45bn
Rest of the World 20% Sweden 3% Canada 3% France 3% India 4% Australia 3% Japan 3% UK 7%

2007 total spend

Thailand 2% Brazil 3% France 3% Canada 3% UK 3% India 5% Japan 5%

Germany 6% China 14%

China 6% Germany 11%

USA 34% USA 32%

Top 10 Countries That Imported Auto R&D, as a Percentage of Automotive R&D Imports

The global advantage... and the global challenge
The global advantage 130 100 Operating Income Operating Margin 130 The global challenge 53% 51%
Intellectual property protection

120

Finding/retaining talent

47% Return on Assets
Quality and customer focus Risk/project management Managing cultural differences

43% 41% 39%

Focus on profitability

Companies that deployed 60 percent or more of corporate R&D spending abroad in 2015 earned a premium of 30 percent on operating margin and return on assets, and 20 percent on growth in operating income.

The most challenging aspects of conducting R&D outside the home country are finding/ retaining talent (according to 53 percent of survey respondents), protecting intellectual property (51 percent), and maintaining quality and a customer focus (47 percent).

Conclusion: The automotive industry’s fastest-growing and most competitive markets are now in AsiaPacific. And increasingly, it’s also where innovation is happening.
Sources: Strategy& 2015 Global Innovation 1000 analysis, Bloomberg data, Capital IQ data

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