Detroit auto show: Firms break R&D record

The global car industry is spending more on research and development than ever before as manufacturers try to stay ahead of a rapidly shifting market and fierce competition from the technology industry.

Investment in new technologies to make cars more efficient, more interactive, run on new fuels and even begin to drive themselves is growing faster than sales and revenue.

R&D spending by the car industry has grown at an annual rate of 8 per cent over the past four years, three times the rate of increase between 2001 and 2012, according to research by the Boston Consulting Group.

The news comes on the eve of the Detroit motor show, the industry’s first product showcase of the year, and traditionally the stage where the world’s biggest carmakers show off their most advanced models.

The R&D push will be visible in launches of new vehicles such as Ford’s next generation F-150 pick-up truck, which took five years to develop and weighs up to 320kgs less than its predecessor. It has radars, cameras and part-autonomy technology.

Today’s vehicles boast in-car entertainment and connectivity controlled by more than 100m lines of software code - more than a fighter jet - and are powered by smaller and more efficient engines, supplemented by electric batteries or hydrogen.

Caught between ever-tougher emission rules, customer demands for more connected vehicles and unprecedented competition from technology providers such as Google and IBM, motor industry leaders are attempting to rebrand themselves as innovators rather than manufacturers.

"Innovation in the automotive industry is retaking centre stage," said Xavier Mosquet, BCG senior partner. "Consumers want to buy cars from companies that bring new technologies to market . . . [THIS]will be a major factor in individual automakers' success."

Volkswagen, General Motors and Toyota, the industry's biggest R&D spenders, increased their combined R&D spending by 13 per cent between 2007 and 2012 to $27.4bn. Their combined annual revenue rose by 8 per cent over the same period. Volkswagen, which owns the VW, Audi and Skoda brands, invests more in R&D than any other company, outpacing traditional technology giants such as Samsung and Microsoft.

Global patent filings for low-emission engine technology by carmakers have doubled over the past five years, raising the prospect of litigation battles between brands for the blueprints of the fuels and powertrains of the future.

Since 2009, GM, has created a $100m venture capital fund, GM Ventures, to invest in technology developers.

(c) 2014 The Financial Times Limited