The most visible driver for innovation of 2007 was the need for greater efficiency and the move to a greener form of automobile. All the main auto shows were dominated by the large automakers showing their plans for cars with alternative energy sources or for improved traditional systems. Many analysts see that the car makers are pushing to develop environmentally friendly cars because they fear that their link with gas-guzzling vehicles is not helping their image. Whilst this is true, the main reason for this innovation is the statutory requirements within which automakers must work with regards to CO2 emissions. With the EU imposing a 130g/km average limit for new passenger cars by 2012 and California looking to move to a 30% reduction in emissions by 2016, regulation is now just as much a driver of change as is consumer demand.

In terms of design the impact of these measures will not only be felt in the engine design area, but also inside the cabin where the physical space of the car is being reconfigured to account for different shapes of batteries and fuel cells. Alongside developments in hybrid engines led by Honda and Toyota, most of the major automakers are experimenting with new hydrogen fuel-cell-based platforms. At the same time, firms such as Renault and Ford-owned Volvo have been introducing a stream of design innovations to improve passenger and now pedestrian safety.

In addition, the full exploitation of multiple-variant opportunities for each platform, which meet niche consumer requirements with a host of space, performance and comfort improvements, has also been a major recent area of innovation activity to support competitive positioning. Finally there are also shifting trends in fuel-type usage in the key geographies that will drive innovation in the whole supply chain: the US moving towards more hybrid use, Europe going more for bio diesel and South America embracing the bio ethanol option. Although many are now questioning the sustainability of the accelerating move to first generation bio fuels, the long-term trend to a broader mix of fuels is clear. As second generation bio fuels, which do not clash in the food vs. fuel debate come on line, they will be joined by more advanced electric power options that take advantage of new battery technologies.