8
2) Increasing complexity continuously challenges
automotive suppliers
RATIONALE
REPLACEMENT RATES, NEW LAUNCHES, AND INNOVATION PROCESS
OEMs increase replacement rates
to quickly adapt to fast-changing
customer requirements.
Similarly, OEMs accelerate new
model launches in order to
penetrate new vehicle segments
as quickly as possible (e.g. hybrid,
SUV, ultra-luxury, etc.).
REPLACEMENT
RATE (%)
14%
2008
17% 16%
2009 2010
26% 26%
20%
19%
16% 17% 16% 15% 15%
11%
2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E
Ø ~21%
Ø ~16%
Suppliers require agile R&D and
production processes to reduce
time-to-market and enable
greater model variety.
NEW MODEL
LAUNCHES (#)
45
31
37
31
39
36
36
46
37
44
49
70
68
Ø ~58
Ø ~38
As a result, the agile, sprint-based
approach of software development
with frequent prototyping, review
and revision must be integrated
into the traditional “waterfall”
engineering lifecycle of suppliers
and OEMs.
INNOVATION
PROCESS
2008 2009 2010 2011 2012 2013 2014
Tech
world
Automotive
industry
? ?
?
Customer
Idea
Concept
Customer
need
Design
2015
Narrative
prototype
Development
2016 2017E 2018E 2019E 2020E
MVP [1]
Release
Prototyping
Data analysis
Adjustments
Release
~6-52
weeks
~6
years
[1] Minimum viable product
Source: BofA Merrill Lynch Global Research (U.S. market); goetzpartners analysis