As global automotive manufacturers face extreme competition, they are
looking to adopt common automation and software architecture at all
global locations to drive operational efficiency and reduce
costs.

New analysis from Frost & Sullivan,
(www.industrialautomation.frost.com) finds that Automation and
Software Solutions in World Automotive Market earned revenues of
$5,813.1 million in 2005 and estimates to reach $9,963.1 million in
2012.

The competition in the automotive market has increased manifold with
no market being considered as a safe market as a result of
globalization. Automotive manufacturers and their suppliers are forced
to replicate the best practices followed in a particular plant at all
their global locations to maintain uniform quality and maximize
productivity. This also necessitates effective communication channels
between OEMs and their suppliers on a global platform. This explains
the need for automation and software solutions for the automotive
market.

“With the kind of competition that is prevailing in the automotive
market, it is becoming increasingly difficult for major automotive
manufacturers to obtain higher profits considering the burgeoning
costs of recalls, warranties and labor,” says Frost & Sullivan
Research Analyst Sanjeev R. Sridharan. “In such an environment,
massive investments by the struggling automotive manufacturers on
automation and software solutions are relatively less.”

The rise in the cost of raw materials coupled with the worldwide
increase in gas prices has created an unfavorable environment for
automotive manufacturers. They are in turn passing on costs down to
their suppliers who are facing an even greater crunch.

“The major automotive manufacturers in the U.S. are also facing huge
costs on account of their contractual obligations to its workers and
pensioners,” says Sridharan. “This has further pulled down their
profit margin thus marginally denting their purchasing power. However
the need to create a leaner and more efficient workflow to attain
operational excellence has driven automotive manufacturers to invest
in newer standards based automation and software solutions.”

The key success factor for automation companies is to establish
long-term partnership with automotive customers. Even as automotive
customers look for standardization, automation companies need to grow
aggressively with their automotive customers as they expand globally.
The relationship starts from educating and generating awareness among
customers. Having selected specific automotive engagement
opportunities, it is important for automation vendors to build
critical momentum and achieve a dominant business differentiator.

Once automotive customers are reasonably satisfied with the metrics,
they are more comfortable awarding repeat orders at many other global
locations. Long-term partnerships could prove to be profitable to both
the automotive industry as well as the automation vendors.