Mastering a successful product launch with respect to time, cost, and quality is a core capability for every organization. However, product-launch delays have multiplied rapidly in recent years in the automotive industry—often with hundreds of millions of euros or dollars at stake for an OEM or tier-one supplier. And that doesn’t include the damage to a company’s brand and reputation.
The failure to launch smoothly can jeopardize an entire company’s competitiveness and brand trust, while disrupting its financial performance. This problem inflicts new industry entrants and established OEMs alike. Based on our research, the central reasons for automotive product-launch delays are the increased complexity of software and electronics and an approach to software development that fails to keep up with growing system-level complexity. The following article outlines best practices and tools to overcome these shortcomings and ensure successful product launches.
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The automotive industry faces a multitude of technology-driven disruptions. Software is becoming progressively more important as it increasingly determines the value of a car. The technologies driving this transformation include autonomous vehicles, connectivity, electrification, and shared mobility (ACES), which offer new opportunities for growth and disruption.
In other words, the digital car is finally arriving—over-the-air updates replace auto-shop visits and suggest new business models while software features replace formerly differentiating factors such as engine characteristics or suspension tuning. Therefore, the capability to manage the development of embedded software systems to deliver the right functionality on time and within budget becomes a differentiating asset.
In this environment, launch delays will become increasingly important vis-à-vis the value at stake, which can add up to hundreds of millions of dollars for an OEM. And that’s not counting the damage to a company’s brand and reputation from delays. Additional opportunity costs can also arise, such as when a delayed launch leads to additional homologation efforts from increased emission standards.
McKinsey research suggests that the global automotive-related software market will roughly double between 2020 and 2030, outgrowing the automotive market in general (Exhibit 1). This dynamic will further increase the risk of software-driven launch problems.
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SOURCE: McKinsey & Company
