IBM Automotive at Frankfurt Motor Show represents more than just a supplier

IBM has for many years seen itself as not only a supplier, but also a powerful partner of the automotive industry; thus it fitting that IBM shows its presence at the 2011 Frankfurt Motor Show (IAA Cars).

The Frankfurt Motor Show (IAA Cars) is the world's most comprehensive show of the automotive industry in that everybody who develops, manufactures or uses passenger cars is usually present. One special feature is the large presence of suppliers throughout the whole automotive value added chain, including special interest media, workshop equipment, engineering services, tuning and telematics solutions.

So, with this year's focus on manufacturers and suppliers, a comprehensive portfolio ranging from classic IT via basic research and strategic consulting to product development is also evident. It is also fitting that IBM would be present, since, after all, its ability to deliver make sit the right partner to have these days in the automotive industry.

Think climate change, growing environmental awareness and declining oil reserves, along with the rapidly advancing development of new technologies; and these are just some of the central framework conditions to which the entire industry must respond.

According to the German Automobile Manufacturers’ Association (VDA), German automakers are investing around EUR 20 billion in developing innovative, climate-friendly, efficient technologies. That is over a third of all investment in industrial research and development in Germany. Meanwhile, consolidation endeavors continue unabated, triggering in turn a new surge in globalization, model development, cost management, and process integration.

This is where IBM comes in. IBM’s offering ranges from consulting on technology and methods, designing IT application architectures, and solution concepts and components to infrastructure and integrated solutions, including sourcing.

Thus IBM has for many years seen itself as not only a supplier, but also a partner of the automotive industry, one with proven experts in the sector, strong consulting and solution competence, and an end-to-end provider of the full bandwidth of appropriate IT products and services.

IBM’s client list includes nearly all of the world’s largest and most successful automakers and their suppliers. Moreover, they are supplied with more than just advice, solutions, and services. IBM studies and analyses provide them with well-founded, analysis-based statements on market trends and current management strategies and help them to eliminate weaknesses along the value chain.

Based on the findings of the IBM study Auto 2020 and on current market changes, greater global corporate integration and more and closer partnerships with suppliers and dealers head the agenda, followed by long-term trends that further change the industry in the years ahead:

1) Electromobility
2) Swifter model changes and more niche products
3) More personalization and additional individual in-car services
4) More environmental awareness and less brand loyalty among customers
5) Opening up new markets, first and foremost Russia, India, and China
6) A sharp increase in cost of materials and scarcity of critical commodities
7) Further global consolidation in the automotive supplies industry
8) Greater recourse to global sourcing

Bottom line is, automobile manufacturers will need to find individual answers to these trends and challenges. IBM will help them to define and implement these answers in a large number of problem areas in corporate and value creation strategy, product lifecycle management, electromobility and connected vehicle, supply chain management, and customer relationship management.

IBM Basic Research and Business Models

In this process, IBM has access to basic research expertise that is among the most successful in the world. This expertise in information processing technologies and systems development methods may become of decisive importance for classic automobile industry groups due to the growing share of software and electronics in automotive value creation. Specific subjects for collaboration with the automobile industry are:

1) Joint basic research in, for example, the areas of battery technology (Li-Air), sensor fusion, analytics and optimization, simulation
2) Joint development of system architectures and solutions
3) Assessment of technology trends based on IBM’s Global Technology Outlook

IBM Stock as an Investment

Despite the major downturns in the market this year, IBM stock (NYSE: IBM) has retained a bullish bias. Looking at the weekly chart, you will see that lower-left to upper-right bias that proves IBM stock sitting and holding up well at weekly support.

There was that sell-off in July, but IBM has held up far better than most stocks. In fact, the daily chart (not shown) has the 50-day moving average above the 150-day moving average.

Full Disclosure: At time of publication, Sherosky, creator of the auto sector charts for TN, is neither long or short with the mentioned stocks or futures, though positions can change at any time. None of the information in this article constitutes a recommendation, but an assessment or opinion.

About the Reporter: After 39 years in the auto industry as a design engineer, Frank Sherosky now trades stocks, futures and writes articles, books and ebooks like, "Perfecting Corporate Character," "Awaken Your Speculator Mind", and "Millennial World Order" via He may be contacted here by email: [email protected] or via his Twitter i.d. @Authorfranks

Additional Reading:
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Investors still sidestep 2012 Camry intro and plunge Toyota stock lower
GM stock cracks another new low despite better sales
Ford stock may be fairly priced after all

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