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Although some research and development work has shifted from mature markets to the developing countries of Brazil, Russia, India and China, only a small percentage of auto makers and suppliers are using the up-and-coming BRIC nations as primary product-development sources on global-vehicle programs, a new study reveals.
The Boston Consulting Group, which worked with 20 OEs, 29 suppliers and a handful of universities in compiling the report, “Winning the BRIC Auto Markets,” says only 20% are using Brazil as a “Center of Competence” in the development of global products.
That percentage falls to 10% for China and 5% for India, the consultancy says.
No engineering work of any kind is under way by multinationals in Russia, despite the fact the country graduates “an impressive 400,000 engineers a year,” the study says.
The reason? Russian consumers prefer to buy vehicles that are identical to those sold in the West, so there is no need for auto makers to adapt existing vehicles to unique market preferences the way they do in China or Brazil.
In addition, local OEs “have not provided a strong foundation for developing automotive experience,” so there isn’t a skilled workforce available to contribute to global engineering programs. Finally, wages have been rising at 20% per annum and are now at about 50% of Western rates, limiting much of the labor-cost advantage of R&D in Russia.
Including the centers of competence, BCG designates four classes of R&D investment in the BRIC countries.
