Carmakers lead German industry in R&D spending

October 28, 2014 // By Christoph Hammerschmidt
The R&D budget is one of the most important indicators for the innovation strength of a company or even an entire industry branch. A study from consulting company strategy& (formerly Booz & Company) attests the German industry as a hole a strong position in the global R&D comparison - German large enterprises spend more than eight times more for research and development than the international average. And the automotive industry leads the already rather innovative industry, claiming the pole position.

According to the strategy& study, the German automotive enterprises together spent (or plan to spend) a total of $28.6 billion in 2014. This represents a 12% hike against 2012 when this group spent $25.5 billion into R&D. The top spender was - no, not BMW or Daimler, the automotive OEMs who are widely perceived as the most innovative ones. It was Volkswagen, who again increased its R&D budget in 2014 by 18.9% to $13.5 billion. Daimler spent $7.0 billion, 4.8% more than in the year before. BMW raised its R&D budget by 6.5% to $5.5 billion.

In a global and industry-spanning comparison however, electronics and IT companies also spend heavily into innovation. Volkswagen, for example, beats Samsung only by a hair's breadth. The Korean electronics giant had an R&D budget of $13.4 billion, followed by Intel with $10.6 billion and Microsoft with $10.4 billion.

The strategy& study titled 'Global Innovation 1000' scrutinised the world's top 1000 publicly listed R&D spenders. Overall, the study shows that the R&D budgets grew only at a small margin globally. The strategy& researchers interpret this as a hint that the R&D resources have been spent more efficient than in earlier years. If innovation can be measured by R&D budgets, China has made the strongest progress: The far eastern country's enterprises within the top 1000 listed companies climbed by the factor of 25 since the year 2005, reaching the level of $30 billion in 2014. During the same period, the number of Chinese companies in this group rose from eight to 114.

The R&D budget depends greatly on industry branch. IT, electronics, automotive and pharmaceuticals constantly were had the highest R&D spending over the past ten years; between 2005 and 2014 they spend two thirds of all global R&D investments.

However, real spending does not necessarily correlate with perceived innovation strength. The strategy& researchers also polled top mangers in global companies which companies they regard as