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Globalising Research & Development

SpecialChem / Apr 1, 2008

Research & Development budgets in the automotive sector are not immune to cost pressures faced by the industry. The challenge for automakers and suppliers is to find innovative ways of optimising R&D expenses in an environment characterised by converging global regulatory trends and the proliferation of diverse products at local levels. An inescapable phenomenon and further evidence that the epicentre of the auto industry's growth has shifted away from mature markets, 95% of global assembly growth is expected to emanate from emerging markets through 2015. A viable business model in these hyper-competitive markets must address the need for localised product development to meet the diverse and rising expectations of increasingly critical consumers. For many OEMs, the shift of price sensitive products to lower-cost locales has helped improve margins. However, as cost pressures intensify, higher value-add activities, such as the transfer of R&D operations, will likely accelerate investment beyond local product adaptation.

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