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COVID-19 crisis will ding automotive R&D, survey shows

According to a new study, the COVID-19 crisis will reduce the automotive research budget by 17 percent this year and 12 percent in 2021.

The IHS market, survey results released on Wednesday, said the development budget is also expected to suffer losses, averaging 13 percent in 2020 and 8 percent in 2021.

“Due to declining sales activity in core markets due to dry cash flows and the imminent ‘little prospect for a return to normalcy’, automakers and suppliers try to reduce their finances by preserving cash and other non-government expenses. Doing, ”the research company said.

The automotive supply chain and technology team at IHS Markit surveyed 140 suppliers and automakers in North America, Europe and Asia.

Twenty-eight percent of respondents said they expected revenue to be affected in the next 12 months.

Respondents also stated that they anticipate some R&D activities, which are now outsourced to bring in-house, especially among medium and large automakers and suppliers.

Other projects are being postponed. According to the survey, mature projects can be delayed by six months and early stage projects are likely to be delayed by a year or more.

IHS Markit analyst Matteo Finn said automakers and suppliers plan to focus on projects that provide quick return on investment Automotive News. Projects that will take six to seven years to produce revenue are not the top priority right now. Companies are aware that the customer base for certain types of products and technologies will not remain for a few years.

One survey defendant said: “As venture capital funds dry up, many startups, especially in LIDAR development and autonomous-driving software, will disappear.”

For example, in the survey, suppliers said that autonomous-driving technologies at Level 3 and above would be affected because they are not something that provides immediate benefits, Finney said.

The survey was conducted between 30 March and 9 April. IHS Market waited in crisis for nearly three weeks as it reached North America to send the survey, allowing companies time to work on their budgets and be able to share financial plans for the remainder. For this year and 2021.

IHS Market said that 30 percent of the respondents worked on a vehicle manufacturer and 70 percent worked on a supplier.

Some growth is expected this year, but pre-Covered-19 levels will most likely not reach until 2022 or later, according to the survey.

Leslie J. Allen contributed to this report.

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