The Innovation System of the Brazilian Automotive Sector: lessons learned from INOVAR-AUTO

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Abstract:

The Brazilian Automotive sector is highly competitive and responsible for major innovations that sustain the technological level of national engineering. However, the Brazilian automotive industry is in a unique situation. All the Brazilian automotive manufacturers are subsidiaries of foreign companies and, because of this, most of the product development takes place in its headquarters and only a few stages of development occur in its Brazilian subsidiaries that support the creation of local knowledge in Research and Development (R&D). The objective of this study is to perform a critical analysis of the Innovation System of the automotive sector under the scheme of the "Program of incentive to the technological innovation and densification of the automotive supply chain” (INOVAR-AUTO), in force from 2013 to 2017, which defined mandatory targets for energy efficiency and spending on R&D and Engineering. The research methodology used was qualitative and exploratory through interviews with the main players of the automotive innovation system (companies, universities, research institutes). The results show that the automakers already established for longer in the country (first comers) have a robust local engineering and levels of investments in R&D and Engineering that surpass the values defined by INOVAR-AUTO. In contrast, new entrants were forced to invest in a minimum amount of local engineering defined by the program. However, due to the lack of clear targets for a technological roadmap for the Brazilian automotive sector, much of the value invested by the new entrants were channeled into the creation of laboratories and research centers without a visible definition of the long-term purpose in terms of which would be the competitive differential of the Brazilian automotive sector with regards to R&D and Engineering. Besides that, the first comers even reduced their R&D organization due to the economic and financial crisis in the country. It is clear the lack of objective for long-term technological roadmap for the automotive industry, for instance, fuel efficiency targets were defined which brought new technologies to the market but these are ones already developed in the Triad market, it means, it was only a local application of technologies already available worldwide. On the other hand, Brazil is the unique country where a flex-fuel technology is available allowing any mixture of gasoline and ethanol as fuel for combustion engine. Brazilian government should create public policies to stimulate higher efficiency for this engine technology in order to be able to export worldwide or even hybrid-flex-fuel engine or fuel-cell hydrogen derived from ethanol which could be future technologies to be a differentiation for worldwide automobile industry. As a suggestion to establish an innovation policy for the Brazilian automotive sector after INOVAR-AUTO, clear long-term rules should be defined with the definition of the sectorial technological objective for competitive differentiation. This could lead to mandatory investment in a common goal among automakers, for example an automotive research center that would foster R&D along with the auto-parts industry, universities and research institutes incorporating the Brazilian automotive sector in the global value chain as a supplier of alternative engines. This study summarizes several proposals for the National Innovation Policy of the automotive sector to be launched in near future called ROTA 2030 (Route 2030).