Auto industry entering a ‘perfect storm’ of change and uncertainty; not all CEOs are prepared for impact – KPMG
Auto industry entering a ‘perfect storm’ of change
Survey: no clear consensus on future drivetrain technology; Toyota named best brand for future success
24 January 2018: As the global auto industry enters a phase of restructuring, global auto executives named connectivity and digitization the number one automotive trend in the 20th KPMG Global Automotive Executive Survey (GAES). The survey overwhelmingly showed that executives believe a shift in the industry is imminent and players will need to build on core competencies while defining a new role for themselves beyond traditional expertise. However, the results also show that most executives show little fear that auto company profitability will decrease. KPMG warns, though, that profitability will decrease as original equipment manufacturers (OEMs) will soon be confronted with tough market conditions and shrinking global markets if they don’t act now to prepare for the industry of tomorrow.
Other key insights identified in the annual KPMG GAES, a survey of almost 1000 executives in the automobile and technology industry and approximately 2000 consumers from around the world, include:
- Auto industry is likely to be driven by policies and regulations
- Countries are likely to match powertrain technology to their raw materials: expect the US to focus on internal combustion engines (ICEs) and fuel cell electric vehicles (FCEVs) while China rules the e-mobility market
- Retail landscape is undergoing dramatic transformation – number of retail outlets will be reduced or transformed by 30-50 percent by 2025
- No one player will master the value chain alone – more companies may be willing to cooperate in the future
- Majority of consumers want to buy a hybrid as their next vehicle
- Battery electric vehicles (BEVs) reclaim spot over fuel cell electric vehicles (FCEVs) as the year’s number one manufacturing trend
- Toyota named by executives as the brand positioned for best future success, followed by BMW and Tesla
Dieter Becker, Global Head of Automotive at KPMG: “The auto industry will need to get comfortable with being uncomfortable during this time of change. There is simply not one global answer and the industry is currently functioning as a set of connected but distinct islands. These entities will change, merge and transform as the industry embraces the technology revolution. KPMG particularly sees this uncertainty in the area of software driven business. The majority of OEMs surveyed believe they are capable of managing a superior platform service to offer mobility services. KPMG holds a different opinion, as we believe it will be extremely challenging for traditional asset-based players to occupy and compete with tech giants for the software-driven mobility opportunities.”
Regulators acting as the driving force
More than three out of four (77 percent) of executives are convinced that while OEMs declared themselves responsible for the technological agenda in the past decades, that role is being taken over by the regulator who will set the primary agenda defined by industry policies. Dieter Becker: “Industry policies in Asia and the US seem to be far more advanced than in Europe: 83 percent of Chinese executives and 81 percent of executives in the US believe their country has clear automotive industry policies. In Western Europe only half of CEO respondents felt the same.”
Multiple drivetrain technologies will co-exist
Execs globally believe in a fairly even split of BEVs (30 percent), hybrids (25 percent), FCEVs (23 percent) and ICEs (23 percent) by 2040 – with BEVs taking the lead. And consumers say “no” to fully alternative drivetrain technologies, with hybrids the number one choice for a consumer’s next car choice and ICEs closely following.
Tidarat Chimluang, Head of Industrial Markets at KPMG in Thailand, said:
“Although it continues to be the largest car manufacturer in Southeast Asia and one of the top vehicle producers globally, Thailand faces obstacles as regional competitors develop their automotive industries and trade tensions between the US and China continue. Thai automotive and parts producers need to find ways to stay competitive. The EV trend can be the game-changer for the Thai automotive industry, as demand continues to be on the rise globally. The government’s roadmap for the general popularization of electric vehicles (EVs) and the approved tax incentive scheme for EV production in the country is a great opportunity for the Thai automotive industry to diversify their production and cater to consumer needs.“
Mobility and logistics will merge
The expectations for a mobility and logistics ecosystem are increasing: more than ever before, executives agree (60 percent) that in future we will no longer differentiate between the transportation of human and goods. Dieter Becker: “One thing is clear: no player will be able to manage it alone. There is awareness among executives, with 83 percent agreeing that with the emergence of what we are calling mobi-listics, companies will need to both re-think their business model and also recognize the need for cooperation to create a mobility ecosystem. The company offering the best customer experience to people and goods will likely own the platform.”
To read more insights from the 2019 KPMG Global Automotive Executive Survey and to use the interactive tool to filter by country, respondents, and topics, please visit home.kpmg/gaes2019.
About KPMG’s Global Automotive Executive Survey 2019
In this year’s survey we asked a total of 3000 respondents questions, of whom 1000 are automotive executives – more than half are C-level executives or CEOs, Presidents or Chairpeople. More than one third of the respondents are based in Western and Eastern Europe, while 14 percent are from North America. About 10 percent each originate from South America, India and ASEAN, China and the region of Japan and South Korea. The rest of the world is represented by the remaining six percent.
The respondents represent companies of all parts of the automotive value chain including vehicle manufacturers, Tier 1, 2 and 3 suppliers, dealers, financial services providers, mobility service providers, energy and infrastructure providers, government authorities and ICT companies. More than 60 percent of all executives act in companies with annual revenues greater than US$1 billion, and 26 percent have revenues higher than US $10 billion. The survey was conducted online and took place between October and November 2018.
Also, 2000 customers from around the world, of all ages and educational backgrounds, were interviewed to give us insights and their valuable perspectives and opinions.All the survey data is now available at home.kpmg/gaes2019 in an interactive online tool where users can compare statistics by country, region, question asked and more. A copy of KPMG’s Global Automotive Executive Survey 2019 can be also found at home.kpmg/gaes2019
About KPMG International
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 154 countries and territories and have 200,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
About KPMG in Thailand
KPMG in Thailand, with more than 1,700 professionals offering audit, tax, and advisory services, is a member firm of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
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