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Automotive Industry Trends Point to Shorter Product Development Cycles

January 23, 2018

As we saw at CES 2018, there is significant excitement about current and future innovation in the automotive and transportation industry. CES 2018 featured many of the automotive industry trends and systems that define the car of the future, including advanced driver-assistance systems (ADAS) and autonomous driving systems, all powered by technologies like light detection, LiDAR and connectivity, among others. 

Connectivity is not a new concept to the industry. GM’s OnStar platform enhanced driver safety and convenience nearly two decades ago. The emergence of smartphones and Bluetooth also introduced a sort of proxy version of automotive connectivity, expanding options for infotainment and navigation for motorists. However, as the sophistication of software, sensor components, wireless networks and embedded intelligence has evolved at a blinding pace, the new infrastructures promise to change the game again for the connected car. 

The Automotive industry trends show that players in the market increasingly face the challenge of adapting business models, product development frameworks, supply chains and manufacturing operations in order to leverage the potential value of a fast-emerging reality. Further, we are seeing traditional industry players challenged by newcomers from the high-tech industry.

Last month, Jabil sponsored an Automotive and Transportation Product Development Cycles survey, focusing on the practical impact of the changing landscape on today's automotive and transportation companies. In our study, we took a close look at automotive industry trends around time-to-market, challenges in addressing innovation and the expected impact of consumer technology companies entering the industry. 

Automotive Industry Trends: Product Development and Launch Cycles Download

New Time-to-Market Expectations for Automotive and Transportation

68% of auto manufacturers have a go-to-market under two years. Tweet This!

Current automotive industry trends show that a majority of automotive and transportation manufacturers have product development cycles of under two years, with 32 percent sharing they're looking at a range of 18 to 24 months. As expected, larger companies with more than 5,000 employees experience these longer product development times, given the complexity of product, organizational, regulatory and other challenges that need to be addressed. 

Looking back at the last five years, 56 percent of respondents agree that product development cycles have been shortened. This should come as no surprise, based on the convergence of automotive technologies and consumer electronics. Consumer electronics tend to have significantly shorter product development cycles compared to the traditional automotive. 

When we examine the reasons behind shorter automotive go-to-market times, our respondents chose the following as their top catalysts: needs to meet consumer or user demand, advances in technology and working with expert suppliers and partners. Other reasons for shorter product development cycles include consolidation of vehicle platforms, more efficient supply chains, the convergence of automotive and consumer electronics and finally, expanded manufacturing capabilities.   

 

On the contrary, 30 percent of respondents believe automotive product development cycles have been lengthened. They chose high research and development costs, government and safety regulations, longer test cycles and other factors as their reasoning. 

Shortening Product Development Cycles: Easier Said Than Done

93% of auto manufacturers face issues in shortening their go-to-market strategy. Tweet This!

Although the majority of automotive product development cycles have been shortening for companies of all sizes, it also appears that they are having issues keeping up. Regardless, there are challenges all companies face in compressing their product development cycles with testing, supply chain and manufacturing taking the top three spots. 

If automotive industry trends from the last five years are any indication, product development cycles are expected to shorten even further. In fact, two out of three automotive manufacturers believe their go-to-market cycles will get faster in the next five years. This means automotive manufacturers must be proactive to solve the challenges they are facing in compressing their go-to-market timelines. Download the full report

New Technologies are Driving the Pace of Innovation in the Automotive Industry

There is a silver lining to the internal industry turmoil, however: it is fueling revolutionary new concepts for consumers. Connectivity technology including V2X will enable remote vehicle diagnostics and access, over-the-air software updates and improved fleet management options, as well as ADAS and self-driving cars.

Participants in our Automotive & Transportation Product Development Cycles survey state better connectivity as the primary driver of innovation. Currently, OEMs derive value from connectivity related hardware, however in the future the most value available from car connectivity will be in software, not hardware. As such, fully capitalizing on the opportunities offered by connected cars require a sharp focus on software development and deployment.  

Through the convergence of consumer electronics and automotive technology, the industry has been flooded with new entrants over the last decade. Once again, 76 percent have seen their go-to-market timelines shorten because of new entrants. However, Tier 1 automotive suppliers admit to being more affected by this than automotive OEMs. 

All in all, 99 percent of respondents see consumer technology companies as catalysts of innovation. As the automotive industry experiences a paradigm shift, respondents believe there is a lot to learn from consumer technologists.  

Developing Partnerships to Transform the Automotive Industry

Given the unfamiliarity of the territory and the opportunities at stake, it is no surprise that collaboration is becoming the byword for connectivity. Automakers are building research and development centers in Silicon Valley and partnering with technology giants from consumer markets. Many automotive OEMs are also considering the design and assembly resources of contract manufacturing partners like Jabil that specialize in combining the rapid innovation and product introductions associated with consumer electronics with the rigorous engineering, testing manufacturing and reliability demands of the automotive industry. 

Whether Detroit or Silicon Valley ultimately dominates the race, both will face some universal challenges along the road. The electronic components, software and networks enabling automotive connectivity will all be held to a far higher standard than those that revolutionized the mobile phone industry. Not only must they perform reliably in the harsh automotive environment, they must perform flawlessly as far as passenger safety is concerned. Designing, testing and manufacturing new component technologies is also a product development challenge for all players – especially as the race to market is so critical to competitive success.

The industry is at a crossroads, which is always rife with both risks and opportunities. It will be interesting to see how the next decade unfolds for the automotive industry. Big changes are ahead.

Automotive Product Development Cycles Survey Demographics

An online survey was fielded to automotive and transportation decision makers at OEMs and Tier 1 suppliers responsible for procurement, product/brand, operations, developing/engineering, marketing or strategy. The main goal was to understand the latest automotive industry trends from a variety of perspectives.

With representation from companies with 1,000 to 10,000+ employees, a total of 203 executives and managers from around the globe completed the survey. All participants were very knowledgeable about go-to-market issues at their own company as well as innovation trends in the overall industry.

Automotive Industry Trends: Product Development and Launch Cycles Download