The latest State of Smart Manufacturing – Automotive Edition reveals an industry navigating economic pressure, workforce gaps and rapid technology shifts. With responses from 130 managers and executives at automotive and tire manufacturers, original equipment manufacturers (OEMs), engineering procurement companies (EPCs) and system integrators around the globe, the report reveals that smart manufacturing and technology will be key players in driving long-term business impact, operational efficiency and workforce potential- but not without some challenges ahead.
Technology Investment Crucial for Business Outcomes
To achieve long-term business goals like quality improvement, cost reduction, increased safety, cybersecurity and compliance, organizations report that investment in technology is overwhelmingly important. Through smart technologies like Generative AI, organizations are equipped to improve business outcomes through better decision-making, quality control, production planning and more. However, 41% of respondents in the survey cited cost as the top obstacle, followed by deploying and integrating new technologies.
A Rise in Workforce Skillset Demands
Inflation, economic uncertainty and market volatility remain top-of-mind for manufacturers, but this year, workforce concerns have overtaken cybersecurity as a primary barrier to growth. In the Automotive, Tire and Battery industries, organizations are dealing with retiring experts taking decades of knowledge with them, and simultaneously requiring new, digital-first skillsets like data science and AI.
To stay competitive, they must deploy new technologies faster and attract employees with the right skillsets. In the report, respondents agree that soft skills like communication, analytical thinking and flexibility continue to be essential, and 77% of respondents report that knowledge of emerging technologies has become just as important when recruiting the next generation of workers.
Using Data for Better Decision-Making
Manufacturers need data for quality monitoring, production planning, ensuring cybersecurity and process optimization, yet many struggle to make optimal use of the data at hand. As it stands, only 5% of automotive respondents use more than 75% of their collected data, though 37% use more than half of their data. With the right technology, workforce skillsets and organizational processes, Auto and Tire manufacturers can easily turn underused data into practical, plant floor improvements.
How manufacturers currently use their data:
- Quality monitoring: 48%
- AI/ML/GenAI applications: 40%
- Production planning: 37%
- Process optimization: 36%
- Cybersecurity: 32%
A Surprising Shift with AI
One of the findings in the report that stood out from previous years’ data is the major shift that’s occurred within the Auto and Tire sector. Leaders are reporting that they see less risk in AI adoption, with confidence in AI technology up 10 points since 2023, as they come to understand how the implementation of AI can bring value to their operations including:
- Helping reduce errors and production anomalies and downtime
- Lowering operating costs
- Improving efficiency and production flexibility
- Supporting workforce development
The top three AI applications reported in the survey include quality control (56%), process optimization (45%) and robotics (45%).
Overall, the automotive industry is expected to outpace other sectors over the next 12 months when it comes to investment in Generative AI/Causal AI technology, with 34% of manufacturers planning to invest, compared to the overall average of 31%. Within a five-year period, that percentage increases significantly - 95% of respondents reported that they have either invested in or plan to invest in AI/ML and GenAI or Causal AI in next five years.
What’s Ahead
Other planned investments include Digital Thread (43%), Robotic Process Automation (39%), Digital Twins, Simulation/Emulation (39%) and Wearables (36%). These technologies also ranked significantly higher in the automotive and tire sector than across the broader manufacturing landscape (32%), for the second consecutive year.
These findings reinforce the importance of adapting to new technologies for organizations that want to solve critical workforce and productivity challenges. Smart manufacturing tools, AI, automation and change management practices will be key to navigating internal and external pressures.
The Takeaway
Ultimately, the 2025 data shows that Automotive, Tire and Battery manufacturers are increasingly viewing smart manufacturing and AI as an opportunity for long-term growth.
Yes, challenges remain—economic uncertainty, shifting workforce dynamics and the complexity of new technologies. But this sector is ready to rethink what’s possible and build the next generation of connected, intelligent and future-proof operations.
To learn more about the findings, read the full industry report here.
