Study: Automotive Suppliers 2017 - Page 8

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