The automobiles & parts sector was the fourth largest contributor to R&D in both the UK850 and the G1400 in 2007
- Eight of the top 25 R&D investors globally are automobiles & parts companies. In contrast, only three UK companies are amongst the 25 leading UK investors in R&D.
- Foreign companies dominate R&D spend in the UK automobiles & parts sector: they spent 92% of the sector total, and over 5% of UK850 spend.
- Seven more automobiles & parts companies entered the UK850 bringing the total to 30.
- R&D in the automobiles & parts continues to grow more quickly than sales amongst the largest investors. This has not been the case amongst the UK850.
This summary provides a brief overview of R&D expenditure by companies within the automobiles & parts sector based on the data which underpin the 2008 R&D Scoreboard. It:
- describes the broad features of R&D in the sector;
- explains the pattern of R&D both in the UK and globally;
- identifies the leading investors in the UK and globally; and
- highlights key trends in R&D spend by the sector.
The automobiles & parts sector
R&D is an important and ongoing feature of the automotive & parts sector given its highlycompetitive nature and short product cycles. Subsequently, a common feature amongst leading companies is a commitment to a high level of R&D expenditure.
The pattern of R&D expenditure
Amongst UK firms
In 2007, UK firms in the automobiles & parts sector invested £1,087 million in R&D, making it the fourth largest sector in the UK850.
The UK automotive & parts sector is now mostly foreign owned (see Table 1). Foreign owned companies contributed 91.7% of spend on R&D by the UK850. In recent years, however, some foreign owners (e.g. Ford, General Motors and Peugeot) have moved their UK production to lower cost locations. In their place have come Japanese manufacturers such as Honda, Nissan and Toyota. In addition, a number of specialist brands (e.g. Mini) continue to thrive.
In terms of R&D, Ford no longer dominates UK companies’ spending on R&D to the same extent as it did last year. It accounted for 24.6% of total UK R&D in 2007, despite having ceased UK production of its Ford-badged cars. Nevertheless, the UK remained one of Ford’s centres for engine production and the continued production of the Transit van and its specialist Land Rover and Jaguar brands.
Table 1: The UK aerospace & defence sector – key facts
Amongst global firms
In 2007, the automobiles & parts sector accounted for 17.0% of the G1400 R&D spend and total expenditure was £46.4 billion, some thirty times that of all UK850 companies in the sector.
R&D expenditure is increasingly consolidated amongst the top companies. In 2007 the five largest investors accounted for 41.0% of total R&D spending in the sector. This reflects the requirement for scale to remain competitive in the industry via faster product development, new plant investments in low cost countries and ongoing R&D. Firms incorporated in Germany, Japan and USA invested most in R&D in this sector.
The major firms
In the UK
The five largest UK R&D investors spent almost £1 billion in 2007 and accounted for 64% of the sector’s spend. The largest investor was Ford (see Table 2). Together with Land Rover and Jaguar Cars, Ford was among the UK’s 25 largest investors in R&D.
Three of the five largest investors in the UK850 were different from the previous year: Jaguar Cars, Bentley Motors and Nissan Motor.
Table 2: The top five UK investors in R&D in the automobiles & parts sector
* - foreign owned firm
# - accounts not prepared using IFRS
Globally
Global R&D spending was dominated by the large original equipment manufacturers who, despite weak profitability in recent years (except Toyota), maintained high levels of R&D (see Table 3). All five of the
largest global investors in R&D in the sector were among the top ten global investors. Three other companies – Robert Bosch (Germany), Honda Motor (Japan) and BMW (Germany) were also among the top
25 global investors.
Table 3: The top five global investors in R&D in the automobiles & parts sector
# - accounts not prepared using IFRS
Trends in R&D expenditure
In the UK
For the UK automotive & parts companies in the UK850, sales grew by 8.6% over the last year whilst R&D fell by 0.7%. This divergence in performance is explained by the market success of specialist brands such as Mini and Land Rover that are built in the UK and the consolidation of production and R&D at Ford.
Globally
For G1400 automotive & parts companies, R&D grew by 6.9% over the last year and 20.3% over the last four years. This mainly reflects lower R&D amongst the three largest firms – Ford, Daimler and General Motors. Japanese manufacturers have significantly increased their R&D in recent years as they have expanded around the globe. Sales by companies in the automotive & parts sector grew by 3.9% in 2007: this compares with growth of 20.0% over the last four years.
