How automotive organizations can maximize the smart factory potential

Industry appetite for smart factories is growing, but do they have the scale for it?

The automotive industry has its sights firmly set on the promise of smart factories, which could be worth up to $167 billion by 2023 and many want a piece of the action, pouring multi-million dollar investments into smart facilities. Our research has shown that firms can realize annual productivity gains of 2.8%–4.4% by 2023 from smart factory initiatives. But despite this potential, only a handful of OEMs and suppliers are set to achieve the necessary scale. We wanted to understand why and to explore how the automotive industry can turn this appetite for smart factories into reality.

Aggressive plans and smart transformations

For the latest report from the Capgemini Research Institute – How automotive organizations can maximize the smart factory potential  – we surveyed a hundred auto firms, 98 of which have existing smart factory initiatives underway. We also spoke to executives overseeing smart factory initiatives across the world. We found that:

  • One in two organizations have made good progress on their journey.
  • Nearly one-third of factories have undergone a smart transformation in the past two years.
  • The industry has aggressive plans for smart factory adoption.
  • One in four auto firms are prepared to invest in a greenfield factory strategy.

Smart factories are the key to thriving in Industry 4.0

To take advantage of the benefits of smart factories, OEMs and suppliers alike have to address a number of priorities, from a comprehensive strategy to integrated solutions, IT–OT convergence to talent. Only then will they be able to take advantage of the full potential of smart factories which are a critical part of Intelligent Industry.

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Sound Bites

Dr. Seshu Bhagavatula, president, New Technologies and Business Initiatives at Ashok Leyland, one of the largest heavy vehicle manufacturers in India

There are three primary reasons why we took up the smart factory initiative. The first is to improve the productivity of our old factories through modernizing and digitizing their operations. The second is to deal with the quality issues that are difficult for human beings to detect. And the third is to incorporate made-to-order or mass customization capabilities. All these formed part of a massive internal strategic program called Modular Business Program.

Volkmar Denner, Chairman of the Board of Management of Robert Bosch GmbH, while inaugurating the expanded smart factory for mobility solutions

Bosch is taking a further step toward more efficient, more flexible, and sustainable manufacturing in India in order to boost competitiveness and meet rising demand in the local market. The new Bidadi plant will further boost India’s strong role in the Bosch Group’s global network.

James P Womack, founder, Lean Enterprise Institute

It takes a lot less effort on our part to get the job done right from the beginning than it does to do kaizen as re-work to get it right much later.

Key Takeaways


Share of automotive factories that have been made smart in the past 18–24 months


Share of automotive manufacturers who believe 5G would be key to their digital transformation over the next five years


Audi’s greenfield smart factory in Mexico was put into operation 30% faster than usual

About the Capgemini Research Institute

Capgemini Research Institute

Capgemini’s #1 ranked in-house think tank on all things digital


Markus Winkler

Executive Vice President – Global Automotive. I am passionate about helping Automotive companies in their transformation towards end-to-end sustainable mobility .

Dr. Rainer Mehl

Expert in Automotive Digital Customer Experience

Ralph Schneider-Maul

Expert in Consumer Products Retail – Distribution & Transportation.

Ramya Krishna Puttur

Expert in Digital Transformation, Innovation, Analytics, Strategy