Envision the long-term chances of innovations

The worldwide megatrends in politics, societies, economies and technology define the
requirements that future cars will have to fulfill – and these will affect almost every
aspect of the automobile. “Car Innovation 2015” has identified 27 megatrends that will
have a significant impact on the automotive industry. Innovation strategies must reflect
the respective trends in order to meet technological standards, economic imperatives,
customer needs and government regulations.

At first glance, many of these trends may seem all too familiar and fail to inspire any
creative thinking. But long-range repercussions to innovation strategies are linked to
each of these megatrends. Take the aging society. It is likely to have a powerful effect
on fashion cycles, technology penetration and even societal ideals. In ten years, the
average customer will be significantly older than today and will have a very different
set of needs. In order to succeed, technologies must be both easy to use and easy to
understand by older consumers.

The ongoing specialization in engineering and manufacturing will cause technological
product differentiation among manufacturers to continuously decrease. As a result, the
value proposition in the automotive industry will continue to move downstream, with
even larger amounts of production – and of R&D – shifting to suppliers. Modularization is a
necessary technique to better control the increasing complexity of cars. Car manufacturers
will focus their innovation efforts on module interfaces and on modules’ brand-defining
features (for example, security for Volvo, comfort for Mercedes-Benz, reliability for
Toyota), and will outsource the safety issues to suppliers.

Overcapacities in all manufacturing areas will continue to exert enormous cost
pressures on the industry. At the same time, raw materials prices will become increasingly
volatile, making flexible pricing a necessity. While the polarization in wealth distribution
will not lead to a collapse of the middle, it will support the success of low-cost cars as
the vehicle segment with the fastest growth worldwide. Toyota was the first to recognize
the chances of new low-cost designs as an enabler to new materials, methods of production
and design principles. Such “cost innovations” will become a major R&D focus driving
the industry beyond 2015.

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