Carmakers Losing Their Desire to Innovate?

Carmakers are shifting more focus from innovation to cost cutting, asserts this year's report from Boston Consulting Group on the world's most innovative companies.

The 24-page study says the proportion of carmakers that rank innovation as one of their top-three priorities fell to 62% this year from 84% in 2013. The ratio of those who plan to spend more on innovation fell to 62% from 71%.

The result was the biggest downward shift of any of the 11 industries analyzed for BCG's top-50 innovators list. Apple Inc. retained its top ranking for the 10th consecutive year.

Last year a record 14 carmakers appeared on the list, including nine in the top 20. This year only nine companies made the cut, with four landing in the top 20. Tesla Motors Inc. jumped 34 places to 7th, making it the most innovative carmaker for 2014.

Other manufacturers and their ranking are Toyota (8), BMW (18), Ford (19), Volkswagen (21), Daimler (25), General Motors (26), Audi (28) and Fiat (32).

The study opines that many carmakers appear to believe that innovation alone won't preserve their profit margins. It notes a stronger focus on cost cutting in all sectors, including the premium end of the automotive market.

The report asked 1,500 senior executives to rank companies in terms of innovation. BCG's ratings are based on respondents' opinion (80%) and each rated company's three-year total shareholder return (10%), three-year revenue growth (5%) and three-year margin growth (5%).