Zinnov G500 report reveals Automotive sector as the leader in R&D Spend
India, January 29, 2014: Zinnov, a leading Globalization Advisory and Market Expansion firm, today announced the results of a study on the Global Top 500 R&D spenders, showing the Automotive industry’s leadership across sectors in R&D spend in 2013.
It read that the Auto industry spent $110 billion globally last year, the highest among the Top 500 R&D spenders in the world. Further, the automotive industry was also among the top three spenders in each region, across North America, Europe, APAC and Japan, with the total spend in the sector rose by 5% over the previous year.
The released Zinnov study brings to light that within the automotive sector, Japan contributed to 40%, followed by 37% from Europe, 13% from North America and 12% from the Asia Pacific region. Volkswagen was the highest R&D spender demonstrating a 32% increase in spend over the previous year. Bosch increased its spend by 14%. Interestingly, China has the highest number of auto R&D centers, with 55. In comparison, India has 30 and the Bay Area in the US has 20.
Of the R&D centers located in India, the highest – 26 – are headquartered in the EU. In fact, BMW is the only automotive company among the Top 50 R&D spenders that hasn’t yet entered India for R&D. And, out of the 26 companies whose global R&D spend has increased by over 20% over the last year, only two in the auto sector – Porsche and Rolls-Royce – do not have an India presence. In fact, in the last five years, the automotive companies have shown growth leading to R&D intensity of almost of 6-7 percent.
According to the report, the Top 500 R&D spenders contribute over USD 577 billion with the Top 100 R&D spenders alone contributing ~66 percent to the global R&D spend. 40 percent of the overall R&D spend is from organizations headquartered in North America, followed by 34 percent from Europe, 18 percent from Japan, and 7 percent from Asia-Pacific. China today is the leading destination for R&D investments with a total of 385 G500 companies having a presence there as compared to 220 G500 companies in the Bay Area and 228 G500 companies in India.
Overall, India has become an R&D hotbed with 874 MNCs having set up 1,031 centers and 45% of the top 500 global R&D spenders having a presence here, the study brought to light. Today, close to 50 percent of the G500 companies present have over 10 percent of the global R&D head count in India. With strong potential for growth in areas such as engineering analytics and significant talent located in the ‘Deccan Triangle’ region – encompassing Pune, Bangalore and Hyderabad – India is poised to become an auto R&D hub. In particular, the automotive sector with its focus on creating differentiated offerings for global markets and appetite for investment, is an attractive industry. However, while cost arbitrage continues to be a key driver for R&D globalization, there is a pressing need for Indian MNC R&D companies to take on big technology bets to drive innovation from here.
Commenting on the study, Sidhant Rastogi, Senior Director, Zinnov, said, “Automotive is an R&D-intensive sector and is one area where companies’ differentiation in the market is heavily dependent on their innovation quotient. India is in a good position to attract more investments from the auto companies already present here, provided we can demonstrate the depth of talent and ecosystem that the sector requires. These success stories will encourage more auto firms to establish a presence in the country, especially in India’s existing auto hubs.”
Founded in 2002, Zinnov – meaning Zeal in Innovation – is a leading Globalization and Market Expansion Advisory firm, with specialization in areas like Global Sourcing, Emerging Markets Expansion, Human Capital Optimization, Small & Medium Businesses, Innovation, Cloud Computing and Enterprise Mobility. Zinnov provides advice to global leaders in business and technology and works collectively with them to tackle prevailing organizational challenges by analyzing changing dynamics, improving performance, and building institutional capability. The services delivered to its clients through advanced reasoning and analytical techniques, provides solutions that help in integrating organizational vision, business definition and processes.