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Huge Opportunity for AI Adoption in Automotive Industry, Finds Capgemini

Mar 28
Tags: Capgemini
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The automotive industry can make huge strides in profitability by implementing AI projects at scale, according to a new report from the Capgemini Research Institute.

Using a model based on a typical top 50 original equipment manufacturer, the study predicted that rolling out AI at scale could deliver increases in operating profit of between five and 16%.

Despite this, Capgemini found that adoption of the technology has slowed, with fewer automotive companies implementing AI projects now than in 2017.

Surveying 500 executives from large automotive companies in eight countries, and building on findings from a comparable study in 2017, the report revealed that just 10% of major automotive companies are currently rolling out AI projects at scale, up from 7% two years ago.

More significantly, there has been a substantial increase in the number of companies not using AI, from 26% in 2017 to 39% today. Just a quarter of automotive firms are now piloting AI projects, down from two-fifths when the research was last conducted.

While the industry as a whole still has a long way to go in terms of AI adoption, Capgemini identified major geographic disparities in use of the technology. In the US, 25% of companies have succeeded in delivering AI at scale, compared with just 8% in France, 5% in Italy and 2% in India.

In China, use of the technology is still modest, but has grown significantly over the past two years, from 5% to 9%.

Adoption may still be relatively low across the automotive sector, but where AI has been implemented at sufficient scale, it is already achieving positive results - and not just in terms of profitability.

According to the report, AI offers benefits across every area of an automotive business, driving average upturns of 16% in research and development (R&D) productivity, 15% in the supply chain, and 16% in manufacturing and operations.

Furthermore, it has resulted in a 14% reduction in direct costs in customer experience and a 17% saving in IT, while also slashing time to market by 13% in marketing/sales and 15% in R&D.

These benefits have come without the often-anticipated impact on jobs. Every executive surveyed said AI is creating new roles rather than shrinking the workforce, compared to 84% in 2017.

Although the industry as a whole was criticised for its slow progress on AI adoption, Capgemini noted that several projects already-implemented are delivering impressive results.

In one example, German manufacturer Continental was found to be using an AI simulation to generate 5,000 miles of vehicle test data per hour. In comparison, physical test driving was only producing 6,500 miles of data a month, at an average of nine miles per hour.

Markus Winkler, global head of automotive at Capgemini, said: "These findings show that the progress of AI in the automotive industry has hit a speedbump. Some companies are enjoying considerable success, but others have struggled to focus on the most effective use cases. 

"Vehicle manufacturers need to start seeing AI not as a standalone opportunity, but as a strategic capability required to shape the future which they must organise investment, talent and governance around."

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