Global auto industry entering a ‘perfect storm’ of change and uncertainty: KPMG

As the global auto industry enters a phase of restructuring, global auto executives named connectivity and digitisation the number one automotive trend in the 20th KPMG Global Automotive Executive Survey (GAES), launched recently. 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 KPMGGAES, a survey of almost 1,000 executives in the automobile and technology industry and approximately 2,000 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 to 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

KPMG Automotive Global Head Dieter Becker said: “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.

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 mobilistics, companies will need to both re-think their business model and also recognise 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.”

About KPMG’S Global Automotive Executive Survey 2019

In this year’s survey we asked a total of 3,000 respondents questions, of whom 1,000 are automotive executives - more than half are C-level executives or CEOS, Presidents or Chairpersons. 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 one, two and three 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, 2,000 customers from around the world, of all ages and educational backgrounds, were interviewed to give us insights and their valuable perspectives and opinions.

A copy of KPMG’S Global Automotive Executive Survey 2019 can be also found at home.kpmg/ gaes2019.