" Innovation is risky, but in business you need to take risks to survive. Research and development takes a lot of time and money, but without innovation a company won't have much of a long-term future."

Innovation is a key driver of economic growth in modern economies. It's all about staying ahead of the competition and giving people what they want – or think they need! For individual companies, there's the dual challenge of preserving the present and planning for the future – in a competitive market, it's often a case of innovate or die. For the car industry the challenge is to meet the growing public and political pressure for zero pollution transport.

In this programme, PY Gerbeau looked at the car industry and what has happened over the first 100 years of its product life cycle. After the first half century, innovation in car manufacture slowed right down. And, with one or two exceptions, the cars we have now are in technological terms not much different from models that came onto the market 50 years ago.

Innovation in the car industry has become evolutionary rather than revolutionary. Cars are essentially commodities, chosen principally on price. But people have lots to choose from within the price range they can afford. Now the focus is on adding value using innovations from information and communication technologies.

"For me, there are three key things in a car. First it must be safe. Second, design – I like to drive something that looks sexy. Third, it's how easy it makes my life. I'm not great at finding my way round, so now I have a car with GPS navigation installed – it's great, especially when I'm driving around London."

In a competitive market, brand loyalty is often a key factor. And when one car is, under the skin, very much like any other, advertising becomes a crucial component of the economics of car manufacturing.

"Manufacturers use ads to try to persuade you that their particular car is different from all the rest. They're selling an image, because really there is very little product differentiation. Sometimes a stunning new design does come along, something which looks very different from the outside. But inside, you usually discover it's much the same as any other car."

Content last updated: 15/06/2002

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