How digital transformation benefits the automotive industry

The automotive industry is one of the great success stories of the previous century, and will always be an example of manufacturing innovation.

So now that we’re on the cusp of yet another revolution in technology, is the industry prepared for it? Or does it still have some work to do?

In this blog, we’ll look at the automotive industry and digital transformation, covering;

So first, let’s discuss where the automotive industry currently stands and the direction it’s heading. Is it prepared for what’s coming next?

Where is the car industry now?

The automotive industry is a behemoth. In the US alone, it’s worth $104 billion. And in Europe, it accounts for 7% of the EU’s total GDP

It’s therefore a hugely important source of economic growth and a staple of international industry.

But like all behemoths, it can be difficult to manoeuvre. 

So how does it stack up as an innovator in 2024?

Despite very well-known advancements in motor vehicle technology, including electric vehicles and the development of autonomous cars, the industrial side of the sector is relatively under-digitalised.

As we mentioned previously, only 24% of the manufacturing sector is pursuing a digital transformation strategy.

For the automotive industry, this kind of hesitation over new technologies could put profitability at serious risk.

But as an industry that spends the most on R & D in Europe, it makes sense that many companies are now looking at their manufacturing processes with the same curiosity.

What’s the next step?

Manufacturers are seeing the need to upgrade their processes. That’s why we’re about to see a significant investment in digital transformation over the next few years.

Estimates vary, but already spending on IT and software has increased substantially in the past 10 years, from around $38 billion to an estimated $168 billion by 2025.

Where this money goes depends on individual plants and companies. But as the opportunity to get ahead of the pack in manufacturing the next generation of road vehicles begins to close, factories are looking to seize it.

This means they’re taking another look at age-old processes like auditing, quality assurance, reporting, and shop floor management.

And they’re finding that digitalisation is helping them improve their metrics across a number of key areas.

Key opportunities of digital transformation for the automotive sector

There are a wide range of important reasons companies are looking to innovate now. Let’s go through the top 5 one-by-one.

Reducing costs

The golden rule for manufacturing applies just as much to the automotive industry as any other. 

Reducing costs is how you can turn a profitable plant into a sector leader, but analogue tools are leaving many sources of cost-saving untapped.

Ordinarily, this might not pose too much of a threat, but for the automotive industry and its fiercely competitive nature, continually improving bottom lines is a must.

Create a sag in your lines and your plant is suddenly a liability. Gaining digital, AI-driven help allows factory managers to reduce this risk and create much leaner workspaces.

Labour challenges

Since Covid, Europe has witnessed unprecedented labour shortages and challenges throughout the economy. 

For manufacturing, and especially automotive manufacturing, factories must not only struggle with general issues like higher staff turnover, lack of experienced labour, reduced productivity and so on, but with legacy production systems, and workforces trained on them.

Reskilling employees is tricky at the best of times. For the automotive industry, reskilling employees on a new product is even harder.

Using outmoded training methods and materials won’t cut it anymore, especially if you value your managers’ time.

Couple this with the fact that fresh, younger talent entering the workforce will now expect a greater deal of digitalisation, and may even depend on it to succeed, means that factories need to adapt.

Legislation

Combustion engines are on the way out. Carbon reduction efforts are maturing. EU legislation has helped produce both of these facts in a relatively short space of time.

Over the next 20 years, the automotive industry will have radically transformed. So too will the manufacturing sector as a whole.

But it will change not only because of the opportunity afforded by new technology, markets, and consumer demand, but because of the impact of legislation.

The legal factor is something car and parts manufacturers are having to consider more and more carefully. Accidents that pollute the environment, for example, now carry heavier penalties. Factories that can’t show a clear accounting of their auditing to regulators risk fines. 

As the race to net zero gains momentum, it’s likely there will be further legislation to either incentivise or punish non-conforming factories. That’s why it makes sense to get help where you can.

Digitalising your auditing and admin will help you gain the certification you need in this new landscape. But more than that, it’ll arm you with the information you need to really make lasting improvements beyond the call of immediate necessity.

Demand

Fluctuating demand among stable product lines is one thing. Sudden demand for new products and options is another. The automotive industry has had to deal with a great deal of the latter in recent years.

Whereas in times past, the consumer may have been content with a few base options to choose from and basic add-ons, the consumer of today demands more and more customisation.

Though this ultimately represents an opportunity for car manufacturers  —especially if it means consumers buy more cars in the long run— it presents a series of challenges at the production phase.

How can rigid, interlocked systems respond to rapid change? It’s nearly impossible using old systems.

Connectivity across the production line is a must to respond to increased, more sophisticated demands from the consumer. To manage a product line that could spill over into the dozens requires assistance from smart tech. 

International competition

The European and American car markets have, for many years now, faced opposition from other international manufacturing hubs. 

This has been a great thing for consumers, creating a rich marketplace with plenty of choice.

However, for manufacturers, it’s created a requirement to continually assess the offer your brand makes, from price to features and beyond.

The manufacturer doesn’t shoulder all of this burden. But the more that international manufacturers continue to innovate their production processes and produce vehicles that respond to current consumer demands, the fiercer the competition will become.

What automotive mPS users say

With the push for digital transformation gathering pace, it’s no surprise that the mlean Production System (mPS) is a favourite of automotive manufacturers.

The mPS is a full suite of modules designed to help manufacturers across every stage of production, from start of production to audits, shop floor management, and beyond.

Throughout the international automotive market and with multiple industry heavyweights, the mPS is helping factories upgrade their processes and embrace the potential of digital technology.

If you’re looking to tighten your production, reskill employees, shave costs, or any other medium or long-term production goal, the mPS stands ready to help.

Its modular system allows you to build a custom set of tools that suit your factory, letting you update your production line at a pace that works for you.

And it’s made life a lot easier for our automotive customers.

 

‘I no longer have to go to colleagues and ask them to tell me what folder the documents I need are in. Today, we have a single screen where you can get all the information you need at a glance and also in granular detail, which has allowed us to become more agile and engaging.’      

– Ruiz Araujo, Plant Director of Antolin Lusitania

 

‘Auditing is the area where we gained the most amount of time, undoubtedly. Before, it could take me up to 4 hours to be able to follow up all the auditing-related actions, while now, I get all the visibility I need in about 5 minutes just by clicking a button on the AMS.’ 

– Julia Alves, Director of Production, Antolin Lusitania

 

‘I start work at 08:30. By 09:00 every morning, I have a crystal-clear view of everything that’s going on in the factory, down to the latest line.

-Alejandro Factory Director, OPmobility Arévalo

See for yourself

To take a closer look at the digital continuous improvement software helping automotive manufacturers the world over, book a free demo with us today.

Our consultants will walk you through the modules most relevant to you and your factory, and explain the full value of the mPS, from KPIs to ROI.

Seeing is believing

Book a demo to see the full power of the mPS.