Automotive industry to massively expand investments in smart factories: Page 3 of 3

February 05, 2020 //By Christoph Hammerschmidt
Automotive industry to massively expand investments in smart factories
The automotive industry plans to increase its investment in the construction of smart factories by more than 60% over the next three years. This puts it ahead of other industries. A current study by the Capgemini Research Institute states that the construction of smart factories can increase productivity by more than $160 billion.

The investment plans of automotive companies are also reflected in the proportion of total sales that they plan to invest in smart factories each year: This is expected to rise from around 2.2% over the last three years to 3.5% by 2023 - an increase of 62%. Automotive companies will focus their investments on a combination of “greenfield” and “brownfield” facilities: 44% are planning a hybrid approach, 31% are considering building brownfield factories (estimated cost for one of the ten largest OEMs: $4 to $7.4 million per facility), and 25% want to invest in a greenfield factory (cost of $1 to $1.3 billion per factory - this sounds more expensive at first, but allows for an efficiency-oriented setup right from the start). The term greenfield stands for the installation of digital technology in a completely new environment, brownfield means the gradual replacement of conventional technology and equipment with digital.

The study extrapolated the productivity growth through intelligent factories until 2023: Even in a conservative scenario, it was $104 billion. Companies like Mercedes-Benz Cars are already exploiting the potential: By using Advanced Data Analytics to create self-learning and self-optimizing production systems, the automaker was able to achieve a fourfold reduction in the reject rate for some key components.

"Since smart factories are a crucial part of Industry 4.0, OEMs and suppliers must also focus on smart operations, "commented Henrik Ljungström, Head of the Automotive Sector at Capgemini in Germany. "This includes making asset management, supply chain and service management 'smart' in order to fully exploit the potential of the various technologies.

However, there is still a long way to go before the automotive industry can fully exploit the potential of intelligent factories: For example, the goal of increasing productivity by 35% has so far only been achieved in 15% of cases.

For the study, 100 managers of major automotive manufacturers and suppliers from eleven countries with sales of more than 1 billion US dollars were surveyed, 98 of whom already operate intelligent factories.

The study (in German language) can be found at .


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