AUTOMOTIVEINDUSTRY

20
20

FOREWORD ON METHODOLOGY
The data contained in and employed for the present report was collected by Cerved Group through the exclusive processing of information from both public and private sources. The term ‘public sources’ is intended here as those available to the public, from institutions including but not limited to the OECD, the Italian National Statistics Institute (Istat),
the Italian Automotive Industry Association (ANFIA), the European Automobile Manufacturers’ Association (ACEA), theNational Mobility Sharing Observatory, the Intesa Sanpaolo banking group and the European Commission. The term
‘private sources’ is intended here as Cerved Group’s proprietary databases on the major companies that operate in theautomotive industry.
The data collected has then been aggregated to build a complete picture of the automotive industry, and broken down todistinguish between four main segments: automobiles, trucks, commercial vehicles and buses, and components. The
graphs presented have been prepared by Cerved Group based on proprietary data and/or public sources listed above.
With regard to aggregation criteria, the following economic activity (Ateco) categories have been included in the analysis:

29.1 – Manufacture of automobiles

29.3 – Manufacture of parts and accessories for automobiles and their engines

This enables our analysis to begin with a brief introduction to the automotive industry as a whole and then proceed to
examine each specific segment.
2

AUTOMOTIVE AT A GLANCE
THE ITALIAN AUTOMOTIVE INDUSTRYRANKS 6TH IN EUROPE AND 19TH IN THE
WORLD FOR PRODUCTION, WHILE IT IS 4TH
IN EUROPE AND 9TH IN THE WORLD IN SALES.

AGGREGATE REVENUE IN ITALY€ bn

65% OF MOTOR VEHICLES MANUFACTURED IN ITALY ARE SOLD ABROAD.
PRODUCTIVEREGION

2.467

163.202

COMPANIESEMPLOYEES

3

AUTOMOTIVE AT A GLANCESEGMENTS
2018; 100%= €106,964 billion

AUTOMOBILESCOMMERCIAL VEHICLES, TRUCKS AND
BUSES

THE ITALIAN AUTOMOTIVE SECTOR CONTAINS 25 START-UPS AND INNOVATIVE
SMEs (a)COMPONENTS

29

43.226

COMPANIESEMPLOYEES

13

14.532

COMPANIESEMPLOYEES

2.425

105.444

COMPANIESEMPLOYEESFDI STOCKS ARE ON THE RISE, GOINGFROM €15.87 BILLION IN 2017 TO €16.693
BILLION IN 2018a) companies registered under Ateco category 29.1 or 29.3

4

HIGHLIGHTS
The automotive industry has played and continues to playa very important role in Italy’s economic development,
especially given the huge number of jobs filled. This true
for the entire value chain, from vehicle and component
design to the manufacture and marketing of finishedgoods both inside the country and around the world.
With regard to vehicle production, in 2019 the Italian automobile industry ranked 6th in Europe and 19th in the world.
In terms of vehicles sales, the Italian market is the 4thlargest in Europe and 9th in the world.
The sector can be split into three main segments:
 automobiles
 commercial vehicles, trucks and buses
 components
In Italy, motor vehicles are manufactured by only a few
large companies. Foreign multinational groups are activein the country through commercial subsidiaries or throughpartner importers and distributors. In the component segment, on the other hand, many different companies oper-

ate, including numerous small to medium sized businesses, spread throughout the country.
Cooperation and partnerships between companies along
the chain are crucial, enabling firms to split the burdensome costs required to research, develop and manufacture increasingly advanced products, by having each partner use its specific skills and know-how.
There are four main automotive industry regions in Italy:
 the industrial district in Piedmont, dominated by the
FIAT-Chrysler group; “Motor Valley” in Emilia Romagna, where the worldfamous Italian luxury brands are produced;
 Lombardy, where there is a high concentration of component manufacturers, especially in the province ofBrescia.
 The Abruzzo automotive industry district, which isactive in new technological developments for motor
vehicles and other machinery.

5

HIGHLIGHTSIn Italy, R&D expenditures in the motor vehicle manufacturing sector account for 12.6% of all R&D investments made in
the country. Globally, the automotive sector is the third-leading industry for R&D spending, behind ICT and healthcare.
Notably, Ferrari, a symbol of Italian motoring excellence, ranks 9 th in the world for the intensity of its R&D investments.
Over the coming years, the following major developments observed will influence the automotive sector:
 sustainable mobility security systems and self-driving cars
 connectivity and in-car services
 car sharing

6

HIGHLIGHTS

Opportunities for the sector stem from:
 green mobility
 shared mobility
 legislative measures to stimulate new technology

The sector’s critical success factors are: investments to develop advanced production systems
 building ‘customer journeys’ to improve customer
loyalty cooperation between carmakers and component
manufacturers
 international partnerships
7

CONTENTS
1. INDUSTRY OVERVIEW
1.1.

Key characteristics

10

1.2.

Key sector data

25

1.3

Main trends

27

2. INTERNATIONAL PERSPECTIVE
2.2.

Investments in Italy37

3. INDUSTRY ATTRACTIVENESS
3.1.

Industry attractiveness radar

42

3.2.

Opportunities

44

3.3.

Critical success factors

46

INDUSTRY OVERVIEWINDUSTRY OVERVIEWKEY CHARACTERISTICS
In the automotive manufacturing sector overall(a), there
are 2,467 active businesses in Italy. These businesses’
combined annual revenue came to around €107 billion in2018 (2% higher than in 2017) and employ about 163,000
people.
The automobile segment accounts for 59% of the total
sector revenue with €63.2 billion, 1.7% more than in
2017.
The component segment is the second largest by revenue, accounting for 30% of the total. In 2018, this segment’s revenue grew by 3.3% year-on-year to €32.5 billion.
The commercial vehicles, trucks and buses segment recorded aggregate revenue of €11.2 billion in 2018, broadly
stable (+0.2%) year-on-year.
All three of these segments have a number of active start-up companies. According to Chamber of Commerce
data, there are 25 companies that officially qualify as

start-ups or innovative SMEs registered under the automotive manufacturing codes, twelve of which are locatedin either Piedmont or Veneto.
Italy has four main automotive industry regions: thePiedmont industrial district, Emilia Romagna’s “Motor
Valley”, Lombardy (host to many component specialists)
and the Abruzzo automotive district (which is active indeveloping new technology for motor vehicles and othermachinery).
In addition, the country has several research institutions
and technology hubs, where applied innovative technology is developed. For the automotive sector, an important
technology hub is the Mechatronics Hub in the provinceof Trento.

a) companies registered under Ateco (economic activity)code 29.1 or 29.3

10

INDUSTRY OVERVIEWKEY CHARACTERISTICS
R&S AND PATENT
Given the importance of technical know-how and technological advances to survive in the industry, it is no surprisethat companies invest heavily in innovation. Considering
only the large companies with over €100 million in annual
revenue, total research and development investments inthe sector exceeded €1.7 billion in 2018. According todata from the European Patent Organisation, European
patent applications in the transport sector rose by 6.6%
year-on-year in 2019 to a total of 9,635. Of these applications submitted, 378 came from Italy, putting it third
behind Germany (2,138) and France (999). Transport remained the leading sector for patent applications in Italy
in 2019.

KEY FIGURES

2.467

163.202

107 Mld. €COMPANIESEMPLOYEESTURNOVER
2018

KEY BUSINESS AREAS

AUTOMOBILESCOMPONENTS

59%

30%

COMMERCIALVEHICLES
11%

11

INDUSTRY OVERVIEWKEY CHARACTERISTICS
AUTOMOBILES
The leading Italian car manufacturers operate on an international scale, yet pay close attention to the idiosyncrasies of each local market. Italy is the 6th leading vehicle producer in Europe and 19th in the world, with about a
1% share of global production.
Production within Italy is almost entirely attributable tocompanies belonging to the FIAT-Chrysler (FCA) group.
Foreign multinational groups do business in the country
through commercial subsidiaries or through partner importers and distributors.
The production structure is characterised by substantial
economies of scale, highly automated and relatively
inflexible production lines, along with high capital intensity.

12

INDUSTRY OVERVIEWKEY CHARACTERISTICS
In evaluating manufacturing activity, certain parameters
are decisive:







plant saturation levels, which is crucial for profitability given the high incidence of fixed costs – more
and more frequently, sufficient saturation levels arereached through agreements between several manufacturers whereby competing models are actuallyassembled on the same physical production line;
production line efficiency, as measured by stocklevels, production speed and maintenance costs tokeep it running safely;
flexibility, as measured by how fast changes can bemade to a given model produced on a given production line.

The extent of vertical integration in the sector is moderate. Almost all car manufacturers directly oversee vehicle assembly phases, whereas all upstream activities –from basic components (e.g. cables, plastic parts andfittings) to complex integrated systems (e.g. brakes) –are normally outsourced. However, manufacturers havesignificant business relations and partnership agreements with component suppliers, going from the designphase to product development. Such vertical cooperation connects carmakers and their suppliers throughout
the entire product life cycle.
Integration downstream has been expanding, as car
manufacturers now tend to manage their commercial
branches with a view to better direct control over key
sales areas. In the corporate car fleet market, for instance, car manufacturers often run their own long-term
rental companies.

EXPORTS & IMPORTS
In 2019, for automobiles, commercial vehicles, trucks
and buses:

exports fell by 8.0% in value from 2018 to €20.8 billion;

imports fell by 1.3% in value from 2018 to €32.9 billion.

13

INDUSTRY OVERVIEWKEY CHARACTERISTICSCOMPONENTS
The supply side in Italy for automotive components iscomposed of three distinct types of companies:
1) a few multinationals that have Italian production facilities to serve both the Italian market and other European markets;2) companies that can be best described as original
equipment suppliers (OES), as they work in direct contact with vehicle manufacturers to provide parts forthe production lines, and often in turn use smaller sub-suppliers;
3) small to medium-sized businesses that produce
components mainly for the after-market (replacement
parts) or operate as sub-suppliers.
As the long-established home of FIAT, the region of Piedmont also has a major automotive component industry: itis estimated that component producers in Piedmont alone
still today account for around 45% of the national automotive sector’s total revenue.
The component segment is highly influenced by auto
manufacturers’ strong bargaining power over most of
their suppliers. Furthermore, carmakers ensure that mostof the costs and uncertainties associated with technolog-

ical innovations are kept on component suppliers’ shoulders.
The supply side can be broken down into three ‘grades’ ofparts suppliers, as follows: Grade A: suppliers of complete modules and systems
that have direct relationships with vehicle manufacturers: they oversee and assemble entire modules,
reducing the manufacturer’s need to coordinate eachstep in this process and thus simplifying component
management for them; they design integrated systems (e.g. brakes), concentrating heavily on technological innovation; there are not very many of thesebusinesses due to high entry barriers in the form of
massive resources needed for R&D activities;
 Grade B: suppliers of single components with a highdegree of complexity, such as brake discs, brake callipers or sensors;
 Grade C: suppliers of components characterised by a
low degree of complexity: these businesses work
mainly as sub-suppliers for ‘A’ and ‘B’ component
companies and more rarely as direct suppliers to vehicle manufacturers (e.g. for cables and wiring, fittings and plastic parts).
14

INDUSTRY OVERVIEWKEY CHARACTERISTICS
The extent of vertical integration is moderate. Auto manufacturers have progressively spun off their component
production activities, forming independent businesses.
In recent years, there has been a growing need for more
extensive interaction between major component producers and companies that operate outside of the automotive
sector. This is due to increasing demand for digital applications to be installed in vehicles – whether for communications, information systems, safety and security orentertainment.

EXPORTS & IMPORTS
In 2019 in the automotive components segment: exports remained broadly stable year-on-year (0.4%), amounting to €14.0 billion;
 imports fell by 2.8% in value year-on-year to €8.6
billion.

15

INDUSTRY OVERVIEWKEY CHARACTERISTICS
PRODUCTIVE REGION:
PIEDMONTThe largest automobile production hub in Italy is in thenorth-western region of Piedmont, which is considered
one of Europe’s five ‘automotive intensive’ regions. The
provinces of Turin, Cuneo and Asti are where automotive
activity is concentrated. The Turin area is the most important of all; it is indeed the only Italian province where
there is a complete automotive production chain fromthe drawing board to final assembly. By contrast, Cuneo
province has component manufacturers along with industrial and agricultural equipment producers, while in

the Asti area we find mainly component producers. The
region’s know-how encompasses all segments of theautomotive industry: cars, light and heavy commercial
vehicles, buses and agricultural equipment, all manufactured with the most advanced technology in terms of bothproduct engineering and the production process.
The FCA group is accompanied by numerous companies
that can provide parts and accessories, manufacturingmachinery and equipment, along with multiple services,
especially regarding styling and engineering aspects.
Piedmont also boasts a robust IT sector, which ensures
excellence in incorporating integrated circuits, software
design and development, as well as solid knowledge innumerous areas linked with automotive features: electronics and microsystems, hydrogen technology andnanotechnology, wireless systems and mechatronics.
Piedmont is also home to major research centres. To
begin with, the Centro Ricerche Fiat (CRF) has high-levellabs and facilities that operate in several different fields,
including environmental science, energy, security, materials and technology. GM Powertrain Europe has alsoestablished its own research centre to develop new lowemissions engines at the Cittadella campus of the Turin
Polytechnic University.
16

INDUSTRY OVERVIEWKEY CHARACTERISTICS
PRODUCTIVE REGION:EMILIA-ROMAGNA

Another industry district of fundamental importance in
Italy is “Motor Valley” in the north-central region of Emilia Romagna, which is home to a few of the most famous
car manufacturers in the world. In the provinces of Modena and Bologna, more specifically, are the headquarters of highly specialised companies dedicated to nichehigh-end vehicles and motorsport. Intense, innovative
research and development activities take place in thearea. The region boasts advanced specialised skills inmechatronics, which is being used with increasing frequency in both plant equipment and in the consumer
products manufactured. In all, the motor vehicle andmechatronics industries in Emilia Romagna employ over

350,000 people, including workers in both manufacturingbusinesses and related services; it is an industry that is
spread throughout the region, with hubs in Modena, Reggio Emilia and Bologna.
Within this context, the Clust-ER Meccatronica Motoristica (Motor Mechatronics Cluster) works to introduce
product and process innovations in the sectors that drive
the regional economy, in order to develop a new generation manufacturing system capable of strengthening theregion’s positioning on the market and at the same timecreating jobs. The Clust-ER is a private-sector association of businesses, research centres and training institutes that share their skills, ideas and resources in aneffort to boost the local auto and mechatronics industry’s competitiveness.
Another important association is MUNER, the Motor Vehicle University of Emilia Romagna, which is a joint initiative of the universities of five cities in the region(Bologna, Modena, Reggio Emilia, Ferrara and Parma)along with the car manufacturers headquartered in theregion, which represent Italian-made excellence throughout the world. This university hub aims to attract students from all over the world. Its objective is to train top
engineers who can design innovative vehicles and ‘smart
manufacturing’ production lines for the local industry.
17

INDUSTRY OVERVIEWKEY CHARACTERISTICS
PRODUCTIVE REGION:LOMBARDY

nessing the potential of the ‘internet of things’. The goal
is to bring about a transport system where infrastructureis used optimally in the interest of environmental sustainability. The Lombard Mobility Cluster, for instance,
promotes and facilities the development of a competitive
mobility industry in Lombardy through research and innovation in ‘smart specialisation’ fields, where the mostpromising business areas on a global level are identified.
This cluster sponsors innovative R&D projects in theautomotive sector.

THE INPROVES PROJECT
Another important automotive sector production area ofthe country is Lombardy, which is home to many component specialists, with a very high concentration in theprovince of Brescia. In particular, many businesses produce parts that require advanced metalworking techniques; it is indeed a region with a long history ofknowledge in metallurgy and skills in melting, pressing,casting and moulding metals. The regional government,
in keeping with EU and national strategies, provides support to businesses to develop products and systems thatwill reduce vehicle emissions and increase their energy
efficiency, as well as advanced safety systems, smart
transport and logistics systems, including ways of har-This is a project that aims to build a network of companies and research centres to manufacture electric vehicles as part of a vision for a large-scale conversion ofroad traffic to electric power. Sponsored by the Lombard
Mobility Cluster and co-funded by the regional government with EU funding, the participants in this project
include several local businesses, the Milan Polytechnic
University and the University of Bergamo.

(Information taken from the website: https://www.clusterlombardomobilita.it/it/progetto/inproves-integrazione-di-prodotto-e-processo-per-larealizzazione-di-motori-elettrici-per-veicoli-stradali)
18

INDUSTRY OVERVIEWKEY CHARACTERISTICS
PRODUCTIVE REGION:LOMBARDY

THE ELECTRIC VEHICLE NOTEBOOKThis is another project under the Lombard Mobility Cluster, in partnership with the Brescia Industry Association,
the Milan Polytechnic University, the Lombardy chapterof Confindustria (the Italian manufacturers’ federation),the Brescia Chamber of Commerce and the University of
Brescia. The purpose of this ‘notebook’ programme is togather and summarise all aspects of regional innovationin the field of electric vehicles. This is to be achieved byfirst illustrating the global, national and regional context,
then advancing a general regional vision and mission forelectric vehicles, focusing on innovative ideas put forward by local companies, research institutes and universities, including: extreme weight reduction of various components tocompensate for battery weight, which increases energy consumption;
 developing chassis that can accommodate both traditional and electric cars;
 dynamic analysis of new layouts for electric vehicles,
including new control systems;
 developing tyres that are optimal for an electric traction system; developing a new traction system that minimises
both overall impact on the environment and energy
usage;
 equipping components with sensors to monitor howeach part is functioning, enabling preventive maintenance and facilitating prognostics;
 applying design paradigms wherever possible toimprove user perception and experience of products(through workshops in automotive component design);
 facilitate access to available forms of financing at
various levels and promote specific financing programmes;
19

INDUSTRY OVERVIEWKEY CHARACTERISTICS
WEIGHT REDUCTION
PRODUCTIVE REGION:LOMBARDY

rethink the vehicle as a product entirely from a circular economy perspective, encouraging the creation ofa quality label;build new generation electric engines that combine
the latest electrical technology, advanced materials
and innovations in mechanics and control;

design new vehicle-to-infrastructure interaction systems.

(Information taken from the website: https://www.clusterlombardomobilita.it/it/progetto/quadernoveicoli-elettrici)

The region is also holding a roundtable on the topic ofreducing the environmental impact of vehicles by reducing their mass. Achieving lighter vehicles involveschanges to both the products and production processes.
This roundtable activity is tied in to roundtables on otherissues and involves both companies and research institutions with specific knowledge in the field.
More specifically, it is a platform that promotes the useof conventional materials (especially metals) throughnew manufacturing techniques. The group studies innovative vehicle architecture to reduce mass. It also studies polymer-metal hybrid materials, concept design forlighter frames, as well as the use of advanced materials
including biomaterials to reduce the weight of vehicles.

(Information
taken
from:
https://
www.clusterlombardomobilita.it/it/tavolotematico/alleggerimento)

20

INDUSTRY OVERVIEWKEY CHARACTERISTICS
PRODUCTIVE REGION:LOMBARDY

VEHICLES AS SENSORSThe ‘smart city’ concept, with the Internet of Things/
Everything, forms a backdrop in which everyone is called
upon to get connected. This means innovating throughnew approaches, models, systems, products and solutions. The “Vehicle as a sensor of the land” project, whose
participants include the Lombard Mobility Cluster, Milan
Polytechnic University and a major local ICT player, puts
the vehicle at the heart of this context and aims to develop
a sensor system that will collect applicable data – not justfor the vehicle itself, but for the area in which it is travelling. The value of this project lies in the innovative use ofvehicles as moving objects which can then observe an

area, interact with it and provide relevant data for managing it to those potentially interested. This data would constitute a decision support system for local authorities. Key
contributions of this project will therefore be: better infrastructure management: road and motorway
maintenance and repair in particular could be planned
and managed more efficiently and accurately;

insurance companies could have more precise information to improve their services and to help determine
the cause of an accident (e.g. whether poor road conditions were a factor);

citizens could benefit from improved signalling systems.

The project will be carried out in two phases. First, a demo
vehicle will be equipped with a sensor system, which will
be used to develop, calibrate and validate data analysis
software. In the second phase, the system developed willthen be evaluated and validated by means of a small fleet
of vehicles, which could include public transport vehicles
or last-mile delivery vehicles. This will include acquisition,
geolocation, data storage and data analysis activities, aswell as the development of a map of road surface wear.
(Information
taken
from:
https://

www.clusterlombardomobilita.it/it/progetto/automezzocome-sensore)
21

INDUSTRY OVERVIEWKEY CHARACTERISTICS
PRODUCTIVE REGION:ABRUZZO

The Abruzzo Automotive Hub aims to facilitate interactions between economic actors and institutions in order
to contribute to research and technological innovations,and encourage the sharing of skills and know-how.
It is a network of both globalised companies and public
sector organisations (major manufacturers, SMEs, universities and research centres) that operate in the automotive and machinery sectors.

This hub in the Val di Sangro, an ‘automotive and mechatronic valley’, brings together over 60 member institutions active in the automotive industry. It focuses on
cutting-edge research to develop technologically advanced products.
The hub has participated in various research projects,
four national (Industria 2015, Ministry of Environment
programme, PON and MIUR) and four European (as partof the EU’s 7th Framework Programme).
It has also initiated over 20 technology transfer projects
involving companies requesting support to modernise
their products or production processes.
This automotive hub is also a participant in the EMERGE
project and in 5G experiments in the regional capital,
L’Aquila. EMERGE is a project for scientific and technological advancement in intelligent transport systems,
conducted in partnership with the University of L’Aquila
and other producers and research centres in the field.

22

INDUSTRY OVERVIEWKEY CHARACTERISTICS
of 5G technology. The heart of this test bed is the GNSSRadiolab located in L’Aquila.

PRODUCTIVE REGION:ABRUZZO

The Abruzzo hub also works in partnership with FIAT’s
research centre (CRF) on the STEV project. STEV, which
is funded by the European Space Agency in connection
with an EMERGE initiative, aims to design, develop andinstall a ‘test bed’ as part of a future validation centre forhigh-integrity localisation and global navigation satellite
systems (GNSS) for automotive applications. As thetechnology evolves, STEV will also support testing andevaluation of multi-sensor solutions, including the use

Two further projects of note have also begun in Abruzzo:
the Horizon 2020 FreeWheel and the Erasmus + AUTO
4.0 programme. The former is a project to design extended electric vehicles using modules and aiming forreconfigurable parts that will be easy to manage. The
latter, meanwhile, is a training and continued professional development programme around Industry 4.0 topics in the automotive sector.
The Automotive Innovation Hub is also a member of thenational Transport Italy 2020 association, which is
acknowledged by the Ministry for Education and Research as a reference point for the transport sector(including mobility both on land and water); it brings
together national industrial and scientific players. Thishub also partners with the Competence Center Cyber 4.0,
a highly specialised cybersecurity institute that also
tackles related topics such as the e-health, automotive
and space sectors.

23

INDUSTRY OVERVIEWKEY CHARACTERISTICS
OTHER
CLUSTERS

In addition to the four main industrial districts describedabove, numerous other research institutes and technology hubs across the country are instrumental in developing applied technologies in many areas, including theautomotive sector.
Most notably, a Mechatronics Hub was recently established in the north-eastern region of Trentino Alto Adige.
This hub is a common space for manufacturing and testing products, conducting research, developing innovative products and new or more efficient production processes using a combination of advanced computer,electronic and mechanical technology. This cluster,whose total annual revenue is over €49 million, includes
companies active in various automotive sector segments including cars, heavy vehicles and component
producers.
In the same region, the Hub for Innovation in Trentino(HIT) was established for the purpose of promoting economic growth in Trentino through advanced technology
transfer and new innovations from scientific research.
HIT has become a partner in numerous initiatives, including National Technology Cluster initiatives in ‘Smart
Factory’ and ‘Smart Communities’ projects. It is also
participating and/or running various EU-level innovation
projects. HIT works to facilitate the transformation of
positive scientific research results into value for businesses and investors (by means of licenses, patents andcontracts) and supports the development of technologically innovative start-up companies.
One of HIT’s founding members, which also plays anactive role in the Mechatronics Hub, is Trentino Sviluppo,
a local government agency that runs six Business Innovation Centres within the province. These business incubators oversee over 100 businesses (start-ups, otheryoung businesses and research centre-affiliates of larger industrial groups), employ over 700 people and generate over €380 million in annual revenue.
24

INDUSTRY OVERVIEW

KEY SECTOR DATA
According to the Italian National Automobile Industry Association (ANFIA), the global production of motor vehicles wasapproximately 95.9 million units in 2018, a year-on-year decrease of 0.8%. In Europe, production fell by 1.2% year-onyear to 20.8 million vehicles. The trend was broadly stable in the Americas with increases only in Brazil (+3.2%) and theUSA (+0.9%). In Asia, vehicle production fell by 1.5% from 2017, driven by a 3.1% drop in China. Focusing on automobiles only, global production fell by 3.2% year-on-year to around 71 million units. This is primarily due to early purchasing that took place towards the end of 2017 ahead of tax increases on locally produced cars with 1.6L engines or smaller, although consumer confidence also dipped in early 2018.
In Italy, automotive businesses attained aggregate revenue of €107 billion, up 1.1% year-on-year.

AGGREGATE REVENUE OF COMPANIES ACTIVE IN ITALY
€ bn

25

INDUSTRY OVERVIEW

KEY SECTOR DATAAGGREGATE REVENUE OF COMPANIES ACTIVE IN ITALY: MANUFACTURERS OF AUTOMOBILES,COMPONENTS, COMMERCIAL VEHICLES AND BUSES
€ bn

26

INDUSTRY OVERVIEW

MAIN TRENDSSUSTAINABLE MOBILITY
Sustainable mobility means an ideal way of travellingquickly and efficiently with little impact on the environment. According to ANFIA, putting this philosophy into
practice requires and integrated approach encompassing
vehicles powered by alternative fuels, constant investments in traditional means of transport, enhancing public transport networks and developing new shared mobility networks, as well as optimising logistics andfreight transport, investing in research and innovation todevelop new kinds of autonomous, connected vehicles.

the development of vehicles powered by alternative
fuels (electric, hybrid, LPG, methane and hydrogen) thatcan effectively replace their fossil fuel-burning counterparts (in terms of performance and affordability) takeson central importance.

‘Smart’ mobility will have a significant impact on a wide
range of sectors. The growing concern for energy efficiency, demand for alternative fuels, interest in sharedmobility and automated vehicles and transport systems
implies that changes are required in corporate organisational models, as new skills sets are needed and newvalue chains are emerging. These trends will also lead toa need for increasing cooperation between sectors, suchas between automotive and energy players. In this vein,

27

INDUSTRY OVERVIEW

MAIN TRENDS
Technological advances have made attention to innovations in electric engine components critical. This brings
about inevitable changes in supply chains, given thevarying innovative capabilities of various different component suppliers.
In Europe, according to preliminary results compiled by
the European Automobile Manufacturers’ Association(ACEA), 1,753,307 new alternative fuel cars were registered in 2019; this figure is 41% higher than the 2018
total. Breaking down these registrations by fuel type,there were 564,225 fully electric (ECV) cars, 365,372
battery-powered (BEV plus fuel cell) cars, 198,853 plugin hybrids, 931,801 HEV mild-full hybrids, and 257,281
gas-powered cars (natural gas, GPL or E85).
Alternative fuel vehicles have gained popularity in Italy,
which was the second-leading market for new alternativefuel car registrations in Europe last year. According to
the latest data available (from ANFIA), cars powered byalternative fuels accounted for 15.7% of all new car reg-istrations in 2019, up from 13.3% in 2018. The biggest
year-on-year increase was recorded by electric cars(+113.4%), followed by hybrids (+34.1%), but othermixed-fuel car registrations also showed year-on-year
growth (petrol-LPG up 8.8% and petrol-methane a moremodest 3.2% increase).
Parallel to the spread of alternative fuel cars, continual
infrastructure developments have been required, including charge station installations (both public and private); such infrastructural development is currently uneven across the country, with a much greater concentration of stations located in the north. According to national electricity provider ENEL, there are currently
11,169 electric car charging stations in the country, and
ANFIA claims that it would be optimal to have at least
30,000 stations installed by 2021, at least 170,000 by
2025 and 560,000 by 2030.

28

INDUSTRY OVERVIEW

MAIN TRENDS
NEW REGISTRATIONS OF ALTERNATIVE FUEL CARS, FEBRUARY 2019 TO FEBRUARY 2020

Source: ANFIA29

INDUSTRY OVERVIEW

MAIN TRENDS
SECURITY SYSTEMS AND SELFDRIVING CARSAdvanced technologies at the testing stage are opening
the door to truly autonomously driven vehicles, as wellas to connections and data exchanges between vehicles and even between vehicles and the road. The key
technologies being developed in this area are CV2X
(cellular vehicle-to-everything), LTE-V2X, and the 5G
mobile network.
V2X (Vehicle-to-everything) is technology that enables
information to be communicated between a vehicle andany other entity that could influence the vehicle or viceversa, through WLAN and/or cellular telephone infrastructure networks. The single greatest enabling factor
for refining and spreading this type of technology is the
5G network, the next generation of mobile communications, which can facilitate data exchanges and allow
greater interaction between different devices andequipment including smartphones, electric car charging
stations, ‘smart’ traffic lights, road infrastructure components, other ‘smart city’ devices and much more.
The importance of the supercomputing element of thistechnology should be underlined. Thanks to sensors
that can collect data from the external environment(e.g. whether pedestrians or obstacles are present),
regarding infrastructure (information about electric car
charging stations and about road conditions), from other vehicles – combined with parallel developments in
artificial intelligence and machine learning – vehicles
will become increasingly autonomous and able to react
to external situations in order to substantially reduce
the risk of accidents caused by human error.
Also of fundamental importance is the use of virtual
reality and augmented reality solutions, in order to provide further support to driving safety. Examples of thisinclude systems that scan and detect objects in surroundings and project information in order to avoid
distractions (e.g. with heads-up displays). Such developments are clear steps towards ‘driverless’ or selfdriving cars equipped with a system over 20 different
sensors, video cameras, radars and ultrasounds in order to see objects that humans cannot, and to generatea mathematical representation of the moving vehicle’s
scenario at each point in time.

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INDUSTRY OVERVIEW

MAIN TRENDS
The internal information system then reads and interprets this scenario to make decisions that will ensure
safe travel, as well as manage the vehicle’s various
functions to reach the destination.
SAE International, an automotive and mobility industry
association that sets engineering standards in theseindustries, has established six levels (from zero to 5) todefine the degree of autonomous driving in vehicles

with a view to establishing limits and restrictions. The
current levels in which the majority of investments arebeing made by carmakers are 3 and 4. According to theEuropean Commission, the self-driving car market willgrow exponentially over the next few years, creatingjobs and leading to profits of up to €620 billion for the
EU-12 automotive industry.

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INDUSTRY OVERVIEW

MAIN TRENDS
CONNECTIVITYSERVICESAND

IN-CAR

Alongside the evolution of the self-driving car, there has
also been exponential growth in vehicle infotainment
systems, which have become increasingly significant
factors in consumers’ purchasing decisions.
In this regard, the main tendency is to turn the timespent travelling into time that can be used for other activities including work, socialising or playing games
thanks to new ‘cognitive technologies’.
In this sense, smart devices (smartphones, tablets,
computers, smart watches and other wearable devices)
can in many cases already be integrated with in-car
software, with a growing number of useful applications
offered by online stores.

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INDUSTRY OVERVIEW

MAIN TRENDSCARSHARING
According to the Osservatorio Nazionale Sharing Mobility (National Shared Mobility Observatory), the use ofshared mobility strategies are growing continuously:over five million Italians use some form of shared mobility. In 2018, there were 363 services dedicated toshared mobility in the country, including but not limited
to car sharing schemes, scooter sharing schemes, carpooling platforms and bike sharing schemes; this is 14
more than there were in 2017. About 5.2 million people
were signed up to these schemes, a million more than ayear before. Also, around 33 million shared journeys
were registered over the course of 2018, which is on
average 60 per minute, double the figure recorded in
2015.
More specifically regarding car sharing, 1.86 million
people were registered for such services in 2018, about
90% of whom were signed up for free-floating services.
There was a sharp 37% year-on-year increase in 2018
in the number of people registered for station-based
services, while free-flow registrations rose by 27%. In
the three-year period from 2015 to 2018, the number ofregistered users of station-based and free-floating car
sharing services rose by 22% and 40%, respectively, per
year on average. A positive trend has also been seen in
shared vehicle rentals, both station-based and freefloating, with respective rental numbers of 270,000 and
11.8 million, around 25% higher than the previous year.
The distance travelled in shared cars in Italy reached33

INDUSTRY OVERVIEW

MAIN TRENDS
88.9 million kilometres in 2018. The distance attributable to free-floating services (80 million km) has doubled since 2015, while the station-based segment total
in 2018 was 12% higher than in 2017 and only slightly
lower than the all-time high reached in 2016.
With regard to the total fleet of shared cars, there was aslight slowdown in the growth rate in 2018 to 7,937
vehicles, 26.5% of which are electric cars; by segment,

the fleet grew by 11% in free-floating and by 39% instation-based services year-on-year.
Geographically speaking, free-floating car sharing remains a phenomenon that is heavily concentrated in
the large cities of northern and central Italy, while station-based car sharing services cover a more extensive
area of the country.

ITALIAN CAR SHARING FLEET34

INDUSTRY OVERVIEW

MAIN TRENDSITALIAN CAR SHARING FLEET BY GEOGRAPHICAL AREA AND FUEL TYPE, AS OF 31/12/2018

total cars

petroldieselhybridelectric

LPG/ methaneNorth-West

4,281

3,265

8

0

1,008

0

Centre

2,855

1,945

29

0

881

0

North-East

393

54

6

64

158

11

Islands

365

191

60

4

30

80

South

43

0

18

0

25

0

TOTAL

7,937

5,455

121

68

2,102

91

Area

Source: Cerved Group illustration of data from the Osservatorio Nazionale Sharing Mobility

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INTERNATIONAL PERSPECTIVE

36

INTERNATIONAL PERSPECTIVEINVESTMENTS IN ITALY
R&D EXPENDITURES
The latest data available from the Organisation for Economic Cooperation and Development (OECD) show thatspending on research and development in the automotive manufacturing sector in Italy reached €1.792 billion
in 2016, accounting for 12.7% of total R&D expendituresin the country. Focusing on the top 2,500 R&D spenders
in the world, in 2017-2018, investments in the automotive sector reached €61 billion, 1.9% more than the previous two-year period and putting it among the top ten
sectors for corporate R&D investments.
According to the 2018 EU Industrial R&D Investment
Scoreboard of the European Commission, the automotive sector is the third-leading sector for R&D investments after ICT and healthcare, absorbing 17.6% of total
R&D expenditures following a 6.9% year-on-year increase. In Europe, the automotive industry is the number
one focus on R&D investments, taking up 30.5% of thetotal after a 6.1% year-on-year increase in spending in
2018.

Leading Italian carmaker Ferrari is ranked ninth in theworld for R&D investment intensity, having invested
around €740 million in 2017-2018.

R&D EXPENDITURE IN ITALY

Source: Cerved Group illustration of OECD data37

INTERNATIONAL PERSPECTIVEINVESTMENTS IN ITALYFOREIGN DIRECT INVESTMENT (FDI)
Based on the OECD’s data on foreign direct investments (FDI), the stock of inward FDI into Italy in the “Manufacture of
motor vehicles, trailers and semi-trailers” sector made up 3.9% of the total in the country. Over the last two years (20172018), FDI inflows have exceeded outflows in the automotive sector. In 2018, inward FDI stocks rose by 5.2% from 2017
to reach a value of $16.693 billion.

ITALY’S INWARD FDI STOCK, 2017 AND 2018
(figures in million USD unless specified)
Inward FDI

Activity% Change

as % of2017-182018 stock

16,6935.2

3.9

422,594

409,718

-3.0

96.1

424,743

426,411

0.4

100

2017

2018

Manufacture of motor vehicles, trailers and semi-trailers

15,870

Other sectors
All sectorsa) FDI positions represent the value of direct investment stocks held at the end of the investment period
Source: Cerved Group illustration of OECD data38

INTERNATIONAL PERSPECTIVEINVESTMENTS IN ITALYFOREIGN DIRECT INVESTMENT (FDI)
Income from inward FDI stocks in the Italian automotive industry rose sharply in 2018, going from a loss of $139 million
the previous year to a net gain of $2.921 billion .

INCOME FROM ITALY’S INWARD FDI STOCKS, 2017 AND 2018
(figures in million USD unless specified)

Activity

Income from inward FDI
2017

2018

% Change 2017
-18

-139

2,921

N.S.

Other sectors

24,13529,94524.1

All sectors

23,99632,866

37.0

Manufacture of motor vehicles, trailers and semi-trailers

Source: Cerved Group illustration of OECD data

39

INTERNATIONAL PERSPECTIVEINVESTMENTS IN ITALYFOREIGN-OWNED COMPANIES IN ITALY
There are 186 active automotive sector companies in Italy that are at least partially foreign-owned. The majority ofthese firms are located in the north. They employ a total of 7,958 workers and their combined annual revenue is over€1.1 billion. It should be noted that 153 of those 186 companies, foreign ownership constitutes a majority of the sharecapital.

ACTIVE FOREIGN-OWNED OR PARTLY FOREIGN-OWNED COMPANIES, AS OF MARCH 2020
Area
North

Centre/South

Total

Number of active companies at least partly foreign-owned- Total

39

147

186

- Majority foreign-owned

32

121

153

- % majority foreign-owned

82.1

82.3

82.3

7,958

61,202

69,1607,749

58,081

65,830

97.4

94.9

95.2

11,15853,77264,931

11,122

52,33263,455

99.7

97.3

97.7

Number of employees of such companies- Total- Majority foreign-owned- % attributable to majority foreign-owned companies
Revenue (2018 aggregate) of such companies, in € mn
- Total- Majority foreign-owned- % attributable to majority foreign-owned companies

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INDUSTRY ATTRACTIVENESS

41

INDUSTRY ATTRACTIVENESSINDUSTRY ATTRACTIVENESSRADAR, 2020(a)costs to build distribution networks. Meanwhile, component producers need to have solid relations with vehicle
manufacturers and access to the after-market distribution
network. These factors also mean that there are substantial exit barriers, given the substantial level of nonrecoverable costs.

BARGAINING POWER OF SUPPLIERSa) The smaller the area between the five points, which
represent attractiveness factors, the more attractive thesector is for business.

THREAT OF NEW ENTRANTS
The likelihood of new entrants is low because entry barriers are high. Automobile manufacturers must invest very
heavily, require advanced knowledge in production processes and industry strategies, and sustain burdensome

As far as vehicle manufacturers are concerned, only topgrade suppliers of strategic components and component
systems are in a position to command significant bargaining power with them, whereas sub-suppliers and lower-grade suppliers are in a much weaker bargaining position than the major carmakers. For component companies, relations with their raw material and electrical andelectronic parts suppliers usually depend on the relative
sizes of the businesses involved. Larger multinational
component groups generally have the ability to negotiatemuch better terms and conditions than smaller local producers.
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INDUSTRY ATTRACTIVENESSINDUSTRY ATTRACTIVENESSRADARBARGAINING POWER OF BUYERS
For auto manufacturers, direct client bargaining power islow, as dealerships and other retailers are normally subject to the producers’ commercial policies. For component producers, on the other hand, the bargaining powerof their clients (the auto manufacturers) is high: carmakers are often able to impose their terms onto supplierswith which they develop and maintain close relations.

RIVALRY
FIRMS

AMONG

stronger new overseas competitors (especially Chineseand Indian producers) that have progressed from simple
production partners of European carmakers into companies that market vehicles in Europe under their own brandnames. In the component segment, competition has also
intensified as a consequence of pressure from carmakers
to lower prices, combined with competing suppliers fromemerging countries for products with low value added.

THREAT OF SUBSTITUTE PRODUCTS

EXISTING

Competition is, in general, very fierce. Among car manufacturers, it is based especially on aggressive pricing
strategies, often under the guise of promotional campaigns such as very high rebates offered for trading in
used vehicles, or offering interest-free financing. Competition has become accentuated partly as a result of

Alternative forms of transport constitute viable threats,
including various forms of public transport and, especially for urban mobility, motorcycles, bicycles, e-bikes and e-scooters.

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INDUSTRY ATTRACTIVENESSOPPORTUNITIESINNOVATIONGREEN MOBILITY

The automotive industry is widely considered to be a driving force for the economy, not just directly, but indirectly
owing to the positive impact it can have along the value
chain, from mechanical components to software products. Innovation is therefore an important competitive
factor.
Of the many trends that have emerged recently in theautomotive sector, we have identified two key areas ofinnovative developments that will influence the sector
over the next few years: green mobility and shared mobility.

Using cleaner technology constitutes the biggest growth
opportunity for the sector as customers will be seeking to
replace their vehicles in a shift from fossil fuels to electric power, to what can be considered a new phase of
motorised travel. In this respect, the main innovative
benchmarks are:
 reducing energy consumption;






reducing carbon dioxide emissions;research on alternative fuels;
reducing vehicle mass;
alternative engines (electric or hybrid).

Italy is currently the second-leading national market inEurope for new alternative fuel cars: in 2019, cars powered by alternative fuels accounted for 15.7% of all new
car registrations in 2019, up from 13.3% in 2018.

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INDUSTRY ATTRACTIVENESSOPPORTUNITIESSHARED MOBILITYLEGISLATION

According to the Italian National Shared Mobility Observatory, the fleet of vehicles dedicated to car sharing services continues to grow, as have the number of operators
offering shared mobility services, in step with rising demand. In 2018, about 5.2 million people were registeredusers of shared mobility services in Italy, a million morethan in 2017. With a view to overhauling fleets to makeway for vehicles powered by alternative fuels, car sharing
fleets offer auto manufacturers a clear opportunity topenetrate the electric car market, in which demand iscoming mainly from large urban areas. Furthermore,shared mobility services could be used as a launch pad
to introduce other automotive innovations, especially self
-driving cars, which are already being trialled in someother countries.

Further motivation for continued innovations – to varying
degrees depending on the geographical area – stems
from measures introduced to reduce pollution. Such laws
and regulations stimulate demand, as they encourage
consumers to replace existing vehicles with ones thatpollute less, particularly electric or hybrid vehicles.

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INDUSTRY ATTRACTIVENESS

CRITICAL SUCCESS FACTORSPRODUCTION
The first success factor is how efficiently a company can run its production platforms in order to make the most of its
production capacity. Within this context, investments allocated to developing advanced systems are currently extremely important, especially with regard to user-experience components and software such as infotainment systems, mobility as a service, V2X systems, artificial intelligence and augmented reality.

46

INDUSTRY ATTRACTIVENESS

CRITICAL SUCCESS FACTORS
BRAND

INTERNATIONAL PARTNERSHIPS

Something that has always been crucial in the automotive sector, although less so today than it was in thepast, is brand image and brand positioning as perceived
by consumers. Customer loyalty is not just about product quality because cars also function as status symbols. As such, the following factors are critical for success: brand image: this can be seen as the ‘possible
worlds’ a brand can project through storytelling thatappeals to and captures the emotional side of its
audiences and leaves a deep impression; building astrong brand image in the automotive sector involves
many factors, though, notably including the carmaker’s historical standing;Forging joint ventures with foreign business partners constitutes a key factor for continued growth and for spreading the innovative component technologies developed in
Italy. This is true for the entire sector, but especially forelectric mobility and the broader ‘smart’ mobility phenomenon. The automotive hub in Lombardy exemplifies
this: through commercial exchanges with the USA, companies achieved 3% year-on-year growth in 2019 on theback of 5% growth the year before, bringing annual sales
up to €13 billion. Exports from Lombardy surpassed the€10 billion mark following 10.5% growth last year andtotal trade value came to around €13 billion.

the customer journey: this refers to the dialogue thata brand manages to establish with drivers in allphases of the relationship, from the purchase tomaintenance, repairs and emergency situations.

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INDUSTRY ATTRACTIVENESS

CRITICAL SUCCESS FACTORSCOOPERATION BETWEEN CARMAKERS AND COMPONENT PRODUCERS
Collaboration along the entire production chain goes
hand-in-hand with R&D investments in the automotive
sector. Cooperating enables the burdensome R&D costs
to be shared, thus substantially reducing business risk. A
cooperative approach also pools the knowledge andknow-how of numerous companies together. One exam-ple of this can be seen in the close partnerships that havebeen established between car manufacturers and companies that design and develop integrated, interconnectedcomponent systems such as brake systems. In addition,some suppliers manage logistics and assembly operations for complete modules (i.e., sets of components that
can then be installed on the vehicle in fewer steps), thus
reducing assembly time and complexity for manufacturers and simplifying their component procurement process.

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www.ice.it

Italian Trade Agency@ITAtradeagency

ITA - Italian Trade Agency@itatradeagency

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