What is Digital Transformation in Automotive Manufacturing?

Digital transformation continues to accelerate across the automotive industry as manufacturers invest in technologies that improve operational efficiency, quality, and agility. Industry analysts have long projected substantial growth in manufacturing technology spending, driven by the need for smarter operations, connected ecosystems, and data-driven decision-making.

Today’s automotive manufacturers face a rapidly evolving landscape shaped by electrification, software-defined vehicles, supply chain complexity, sustainability goals, and increasing customer expectations. To remain competitive, organizations are expanding investments in industrial data platforms, AI-powered analytics, cloud technologies, and advanced automation solutions that provide greater visibility and control across production operations.

Industry reports indicate that automotive manufacturers plan to significantly increase digital investments over the coming years as they modernize production environments, enhance workforce productivity, improve product quality, and support new vehicle programs. Technologies such as real-time monitoring, predictive maintenance, digital twins, and smart factory solutions are becoming critical enablers of operational excellence.

However, our teams continue to see that many automotive manufacturers remain cautious when adopting new digital technologies. In an industry where uptime and production continuity are paramount, organizations often prioritize maintaining existing systems over pursuing broader modernization initiatives. While this approach can minimize short-term disruption, it may also limit opportunities to improve performance, increase flexibility, and unlock the full value of emerging industrial technologies.

Some of the challenges faced by the industry include:

• Maintaining high uptime of manufacturing
• Improving cycle time
• Increasing resource efficiency
• Ensuring cybersecurity
• Supporting the agility required for new models, EV, autonomous, etc.
• Retiring workforce and a new generation of digital workers

How can automotive manufacturers best utilize the capacity they have in place and be flexible as more models are introduced?

Certainly, more exciting technologies are coming from the automotive sector including autonomous and EVs. The push for EV vehicles will have an impact on the process as many steps will be skipped – for example, adding a gas tank won’t be needed. This is a big push for the industry, and flexible manufacturing processes to handle gas-powered vs electric vehicles will be an even greater requirement.

Another challenge for manufacturing (in many industries, not just automotive) is new employees coming in to replace retiring workers. This is a new generation that has grown up on computers and advanced technology. Manufacturers need to address the best way for these new workers to come up to speed and stay engaged.

Recently, we’ve worked with some customers closely to help push their digital transformation agenda. Some great examples we’ve seen from some of our automotive customers recently are:

Digitization of Weld - By taking a paper-based process that relied on human interaction to determine weld quality and moving it to a process that reads data directly from laser welders, this major automotive OEM was not only able to improve their quality but also reduce their cycle time of the weld process.

Taking advantage of this digitized data allowed them to visualize any weld issues in real time. No longer would they need to transcribe data, sample vehicles and deal with paper. They achieved better quality and reduced cycle time – which translate to better reputation and more revenue.

Automated Storage/Retrieval System – When vehicles come out of the Paint shop, they are placed in a large storage bin to wait their turn for general assembly. Which vehicle is selected next will rely on order schedule, vehicle features, etc., so that the general assembly process can run as efficiently as possible. For instance, there may be rules that you can only run two sunroof cars in a row, or it could impact takt time.

Using real-time data on available vehicles, our automotive software system can select the best vehicle to put on the general assembly line next. By doing this, we are ensuring general assembly has the most efficient plan to deliver the needed vehicles for plan. This can help reduce cycle time and improve throughout.

Analytics around Paint Quality – Dealing with data coming from the plant floor, we can run analytics to determine quality of the body paint. For example, looking for imperfections and Orange Peel, we can understand, based on a myriad of variables, whether a vehicle will have paint quality issues. Using this system will help improve quality and customer satisfaction, leading to improved brand equity and revenue.

All of these examples are possible by taking advantage of the large amount of data available in the automotive manufacturing and automotive operations processes.

It doesn’t stop there. More exciting technologies are making their way to the plant floor. Augmented Reality is allowing automotive customers to error proof their assembly process by showing operators what parts to install and where. Mobility also continues to make inroads at the plant, allowing visibility into data and alerts. And, the cloud is being seen more and more as manufacturers feel better about making their data available for applications.

The automotive industry is going through exciting times with new technologies within the plant and innovative products for consumers.

Digital transformation is a means for OEMs and tier suppliers to evaluate their processes to determine how they need to change to get these new products to customers.

Learn how Velotic is helping automotive manufacturers transition to smart factories and tackle the latest challenges facing the industry.