The Global Automotive ER&D Spend for 2019 Is Pegged at USD 158 Billion, on the Back of a Consistent ~5% Y-o-Y Growth, Says Zinnov
- Europe contributes the lion's share to the global Automotive ER&D spend, accounting for ~50%, followed closely by APAC, which contributes 35% of the total spend
- The Z1000 global Automotive ER&D spenders account for ~88% of overall Automotive ER&D spending, with the top 10 companies accounting for ~60% of the overall spend. The Z1000 is a comprehensive list of global top 1000 ER&D spenders across 20+verticals tracked by Zinnov.
BANGALORE, India, Dec. 5, 2019 /PRNewswire/ -- Zinnov, a leading global management and strategy consulting firm, released its global ratings for Automotive ER&D companies, titled, 'Zinnov Zones for Automotive ER&D Services - 2019,' today. The study analyzed the top Service Providers across different focus areas such as Human Capital, Capabilities, Innovation, Financial Health, etc., to enable business leaders in the Automotive sector to make informed procurement decisions for Automotive ER&D services.
The Zinnov study titled, 'Zinnov Zones for Automotive ER&D Services - 2019,' highlighted that though the global Automotive ER&D spend is growing at a modest 5%, European OEMs and tier-1 companies are the dominant spenders. This spend accounts for ~50% of the global ER&D Automotive spend, led by investments from companies such as BMW, Continental AG, and Daimler AG. Further, the study estimated that APAC accounts for USD 55 Billion or 35% of the global ER&D Automotive spend, led by Toyota, Denso, and Honda Motors. North America accounts for only about USD 24 Billion or 15% of the global ER&D Automotive spend, led mainly by Ford Motor Company, General Motors, and Tesla.
Zinnov, for the first time, has done a comprehensive assessment of 26 Global Engineering Service Providers to evaluate their overall ER&D Automotive capabilities across 30+ parameters and sub-parameters across different automotive micro-verticals such as
- Advanced Driver Assistance and Security (ADAS)
- Body Engineering
- Cockpit Electronics
- Electric Powertrain
- Telematics
Some of the key trends that emerged in the study include -
- Globally, the Automotive industry has been impacted by trends such as mobility (shared ownership models, Mobility-as-a-service, etc.), the need for enhanced safety and autonomous capabilities, and a shift towards electrification of the power train. Car makers are expending efforts to enhance customer experience through connectivity options and advanced infotainment systems as well.
- Evolving customer preferences have led to a shift in the R&D priorities of carmakers. There is an enhanced focus on the software layer to enable autonomous and ADAS capabilities. These Digital Engineering investments will drive the next wave of growth in Automotive ER&D spending.
- Carmakers have announced investments with caution. There are instances of automakers exploring joint efforts to cut costs and drive synergies. For example, BMW and JLR have collaborated for development on EVs. Honda and General Motors are sharing autonomous vehicle development efforts.
- With Digital Engineering increasingly taking center stage for enterprise spending, large investments around Automated Driving & Connectivity, Intelligent & Shared Mobility, and Industry 4.0 have resulted in newer opportunities for Service Providers.
Speaking about the report, Pari Natarajan, CEO, Zinnov, said, "Automotive OEMs and component manufacturers are increasing their R&D spend on Digital Engineering initiatives to build autonomous, ADAS, and Industry 4.0 capabilities. Currently, such initiatives account for 15% of the total Automotive ER&D spend and is further expected to increase. These investments on newer themes such as mobility, electrification, enhancing customer experience through infotainment will drive the future spending in the space."
He further added, "Growth in traditional mechanical/embedded workstreams are serviced by providers who operate at low margins and rates, thereby limiting headroom growth. Service Providers who have diversified and pivoted their offerings around Digital Engineering themes have increased their odds of success."
Service Providers assessed include: Akka*, Alten*, Altran, Aspire Systems*, Bertrandt*, Capgemini, Embitel, GlobalLogic*, HARMAN Connected Services*, IAV*, Itransition*, KPIT, L&T TS, Mobica, QuEST Global, Robert Bosch Engineering and Business Solutions*, Sasken, Softdel*, Tata Elxsi, Tata Technologies, TCS, Tech Mahindra, Tieto, UST Global, VVDN Technologies, Wipro
*Service Providers that have not participated in the evaluation and have been evaluated based on Zinnov's understanding
About Zinnov Zones
Zinnov Zones is an annual rating published by Zinnov which rates Service Providers based on their competencies, capabilities, and market success. Since 2009, Zinnov Zones (previously known as GSPR - Global Service Provider Ratings) has become one of the most trusted reports globally, for both enterprises and Service Providers to better understand the vendor ecosystem across multiple domains such as Digital Transformation, ER&D services, IoT, RPA, and Media and Entertainment.
About Zinnov
Founded in 2002, Zinnov is a global management and strategy consulting firm, with presence in Santa Clara, Houston, Bangalore, and Gurgaon. Over the past 17 years, Zinnov has successfully consulted with over 250+ Fortune 500 customers to develop actionable insights that help them in their transformation journeys. With core expertise in Product Engineering and Digital Transformation, Zinnov assists clients by:
- Providing research and strategy consulting for Technology Service Providers in the areas of Product Engineering and Digital Transformation;
- Enabling companies to develop and optimize a global engineering partner strategy to achieve higher throughput, innovation, productivity, and cost savings;
- Growing revenue for companies' products and services in India and other emerging markets;
- Helping MNCs expand and/or consolidate their globalization footprint.
With their team of experienced professionals and research teams, Zinnov serves clients from across software, semiconductor, consumer electronics, travel and hospitality, automotive, storage, telecom & networking, healthcare, banking, financial services, and retail verticals in US, Europe, Japan, and India.
For more information, visit http://zinnov.com.
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