The bigger picture: market trends
KPMG's 2012 global survey shows that the automotive industry continues to face environmental challenges, growing urbanization and shifting customer behavior, which calls for radical new approaches to future mobility. And these issues are becoming universal, with three-quarters (75 percent) of respondents believing that emerging and mature markets will converge by 2025.
Electrified vehicles will not exceed 15 percent of annual global new car registrations before 2025. And for the immediate future, hybrids will continue to be more popular than pure battery-powered cars. Over time, fuel cell vehicles are seen as a more promising prospect than battery-electrified cars, especially in the BRICs.
Today's cars must adapt to their environment. Half the respondents (50 percent) feel that vehicle design and usage will be influenced by urban planning. And a majority think that new mobility solutions are needed not just for mature, but also for emerging markets, in order to attract future city residents.
Car manufacturers and IT companies are realizing the car's potential as a gateway to the internet. But connectivity is about far more than just entertainment; the new technology enhances safety by helping vehicles communicate with their external environment. Respondents are uncertain about who will own the significant revenue streams associated with in-car 'infotainment' and connected solutions.
The financing of e-components is having an increasingly important influence upon consumers' purchase decisions. However, above all, it seems there's still no substitute for high quality, personal service. Besides that, 81 percent expect dealers to invest more in web marketing and advertising, while 72 percent forecast increased investment in IT systems and e-commerce sales platforms.
Cooperation and alliances
As automotive companies embrace electromobility, urban mobility concepts and ubiquitous connectivity, and reach out to new markets, partnerships are seen as an essential strategy to achieve further growth. Regionally such joint activity will be focused primarily in China, Russia and Central/Eastern Europe.
As expected, 80 percent of respondents see China as the biggest automotive market in terms of both sales and production in 2016. The US is a clear number two while Brazil and India fight for the third position. Meanwhile, the export drive from the BRICs is gathering pace, as they look for suitable hubs such as Turkey or Brazil to access the more mature economies.
Global manufacturing capacity is forecast to rise significantly over the next five years. The vast majority of respondents see Asia-Pacific as being the driver, with China leading the way. Balancing capacity building and production volumes will be of utmost importance for OEMs striving to expand their global footprint while keeping down fixed costs to maintain healthy margins.
Winners in the race for global market share
Over the next five years, the respondents to KPMG's 2012 survey believe European and Asian OEMs are the most likely to gain global market share, with the current undisputed leader Volkswagen forecast for further growth. What does it take to succeed in the new mobile landscape?
Given the growing pressures on fuel efficiency, it is no surprise that the vast majority consider electromobility to be the most pressing trend in the automotive industry, either driven via batteries, ranked as most important, or fuel cells, which come a close second. In the face of growing urbanization, city dwellers need cars adapted to their particular environment, which explains why urban-oriented design is considered the third most important trend for the future of the automotive industry. Furthermore, as cities seek to reduce pollution and congestion, car ownership will become restricted and not available for everyone. One could take it even further: Even if car design is adapted to urban habits, not everybody wants to have his own car anymore. In this regard, intelligent mobility services, e.g. car-sharing, should not be neglected. Despite the omnipresence of electromobility, respondents consider such approaches as the forth most important trend for the coming 10-15 years. Another area of growing importance is financing and leasing options, especially in emerging markets, where the potential of finance and lease services for the growing middle class has barely been tapped. Connected car concepts are also on the agenda of automakers, as more and more vehicles continuously interact with the real and virtual world around them. This trend is set to accelerate to mass-market levels, not least because it increases vehicle safety.
Markets are converging faster than you think
The concept of a two-tier global industry is rapidly becoming redundant. The vast majority of respondents believe that by 2025, the emerging and mature markets will converge in terms of customer requirements for quality, safety, and reliability, as well as for vehicle segment shares between low-cost and premium. Such convergence has big implications for OEMs from developed countries. On the one hand an expanding range of market opportunities will open up, including electric vehicles and mobility services; however, they can also expect fiercer competition from the BRICs over traditional and new technologies in their domestic markets. Chinese car manufacturers such as SAIC, Geely and BYD, are setting their sights on the global car market with vehicles that are becoming technologically competitive. Pedro Nueno, President of the China Europe International Business School, even feels these companies could become established in the West within a matter of years, especially with electric vehicles.
Find the full version of the study in the attached pdf document