Automotive suppliers were expected to be responsible for nearly 60 per cent of the industry’s research and development by 2010, up from about 40 per cent in 2004, a report by the consultancy firm...

Automotive suppliers were expected to be responsible for nearly 60 per cent of the industry’s research and development by 2010, up from about 40 per cent in 2004, a report by the consultancy firm Roland Berger suggested. The findings, from a study of 40 companies worldwide, underscore the increasing complexity of vehicle technology and the pressure felt by suppliers to remain competitive as car makers demand price cuts. The study highlighted the knock-on effect among the supplier community of car makers’ increasing attempts to develop a broad range of niche vehicles, each with different types of content designed to appeal to smaller groups of customers. Wim van Acker, Managing Director of Roland Berger’s Detroit-based automotive practice, said ‘New model proliferation and product complexity’ would increase, along with pressure to reduce costs and cut product development lead times. The electronics content of an average car in the 1970s, for example, was less than 10 per cent and it was expected to top 40 per cent by 2010. Much of the innovation would be driven by suppliers because car makers’ R&D expenditures as a percentage of sales had remained flat at about 4 per cent over the past 4–5 years. At the same time, car makers had cut the amount of time needed to develop new vehicles from about 36 months in the mid-1990s to 24 months or less currently