It may be little surprise to someone who has shopped for a new vehicle lately, but the automotive industry is among the most advanced in the world when it comes to technology innovation.
Worldwide patent filings in the sector rank third in the list of top 12 technology sectors behind telecommunications and computing, according to the latest data from Thomson Reuters.
While computing has a strong lead, the report says the auto sector had the highest percentage change in patenting volume of all sectors between 2012 and 2013. Over the past five years, automotive inventions have grown by double-digit figures year-over-year.
Manufacturers are working aggressively to build vehicles with greater fuel efficiency, along with better hybrid and electric versions. Also in development are cars and trucks that can sense collisions before they happen and that can even communicate with each other on the road. Companies are also ramping up their digital strategies at the retail level. That’s helping to shift the focus on technology over transportation.
“Clearly, the automotive sector is a vibrant area of innovation,” says Bob Stembridge, senior patent analyst, Thomson Reuters IP & Science.
The patent information suggests future innovations will be focused on areas such as: telematics (where cars communicate by computer/mobile technology); driver assistance (auto-breaking and traffic sign recognition); heads-up displays (smartphone data appears on the windshield to lessen driver distraction) and autonomous driving.
Autonomous driving has gained a lot of attention recently with the promotion of Google’s Self-Driving Car, which is still a long way from commercial adoption. While Google is grabbing most of the headlines, Stembridge says traditional manufacturers such as Toyota, General Motors and Hyundai have filed the largest number of patents in the autonomous driving area.
GM has seen the most growth in autonomous driving patents, many of which are related to collision prevention.
“It has a lot to do with sensing the environment and responding accordingly,” Stembridge says.
What’s driving auto innovation?
Most of the automotive patents filed across all categories have been made by Japanese automakers such as Toyota, Honda and Denso, but Korea-based Hyundai has seen the fastest growth in recent years. Hyundai is projected to have more patent publications than any other automotive company in 2014, once final numbers are compiled.
“They are becoming a really significant force for automation in the automotive sector. They are poised to overtake leaders Toyota and [German-based] Bosch,” says Stembridge.
Changing technology, consumer demand and government emphasis on fuel economy are driving a lot of innovation in the auto sector today. Still, commercialization of products in the sector is slow relative to other industries, says automotive consultant Dennis Desrosiers.
“On the product side I would argue that the auto sector is risk averse in that its innovation does develop, but it takes a lot longer than in other sectors,” says Desrosiers. “There are more examples of technology filtering into the industry, such as exploding into the industry.”
He says the best example is hybrid vehicles, which were first introduced 15 years ago in Canada. Only about 55,000 hybrid vehicles have been sold in the country since.
That’s why Ford’s decision to make an all-aluminum body for its best-selling, most-profitable F-150 is “shocking,” according to Desrosiers.
“To have a radical change in technology like that is unheard of in the industry,” he says.
It’s considered a proactive move in anticipation of tough fuel efficiency standards coming in the U.S., where cars and light-duty trucks by Model Year 2025 must have an equivalent fuel economy of nearly 55 miles per gallon.
Investment in propulsion systems, which help to improve fuel economy of internal combustion engines, is an area of"intense interest and innovation,” says the Thomson Reuters report, noting that patents for propulsion technology are growing faster than all other categories.
Digital revolution at the retail level
While much of the innovation in the sector is revolves around advancing the automotive product, there are also some drastic changes taking place in the industry at the dealership level. Automakers are investing millions in digital strategies to cater to the overwhelming number of consumers going online to buy their next car or truck.
A recent study from international consulting firm Capgemini shows most car shoppers start their shopping experience online; 97 per cent use the Internet for research; 73 per cent are influenced by make and model reviews on social media and 44 per cent are willing to buy a vehicle online.
“That is probably the biggest innovation right now that is going to fundamentally change the face of the auto industry – the move to digital retailing strategies,” says Desrosiers, citing dealerships in Ontario that are selling luxury vehicles to consumers in other parts of Canada.
“It’s groundbreaking.”
AutoNation, America’s largest dealership group with 277 new vehicle franchises across the U.S., recently launched a digital storefront named “Smart Choice.”
The company made a two-year, $100 million (U.S.) investment that will enable customers to finance and buy a car online. The company says the service will soon be expanded to include the handling of trade-ins, provide financing quotes and arranging service appointments.
“I’m 100-per-cent convinced … that the strategy we are pursuing over time will be a sustainable competitive advantage for AutoNation, which is one of the hardest things to do in business,” AutoNation chief executive Mike Jackson told investors on a Feb. 3 earnings conference call.
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This content was produced by The Globe and Mail's advertising department, in consultation with Thomson Reuters. The Globe's editorial department was not involved in its creation.