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Innovation’s slow lane
By David Eldridge
Posted 12 February 2015
Are carmakers cutting back on innovation? This is the industry that created the industrial production line, anti-lock brakes and many other technologies throughout a history of breakthroughs. But in Boston Consulting Group’s annual report on Most Innovative Companies 2014, nine car companies made the Top 50 compared with 14 in 2013. Electric vehicle maker Tesla was the star performer, leaping to 7th place, just above Toyota. BCG wondered whether Tesla’s disruptive strategy has changed respondents’ perception of what constitutes innovation in the automotive sector.
A different impression of car makers comes from looking at R&D investment as an indicator of innovation. Volkswagen continues to lead EU companies in all sectors for R&D spending, according to the 2014 EU Industrial R&D Investment Scoreboard. 
EU companies in the automobile and parts sector did show slower growth of 6.2% in 2013, compared with 14.4% in 2012. But this was still well above sales growth of 1.8%. Also, companies based in Germany and the UK had strong R&D growth of 9.7% and 9.5% respectively in 2013, while French companies decreased R&D by 8.9%.
Applications under the hood are an area where plastics have helped car makers innovate, as was shown at our conference in Frankfurt (see page 22). Executives from Ford and Renault discussed lightweighting innovation programmes but also cautioned about higher costs that can stop these projects from making it into production.
In BCG’s report, respondents from car companies reported a decline in the priority given to innovation. “Cost-cutting has re-emerged as an important priority – even at the premium end of the market – as many automakers seem to be concerned that innovation alone will not preserve their margins,” said BCG.
For car makers, innovation always has to be balanced by cost. It’s a delicate balancing act and maybe cost is now starting to weigh more heavily as automotive groups respond to global market pressures.

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