Electronic vehicles are expected to comprise 10 percent of market share for new car sales in China by 2025, due to increased environmental focus and regulations, finds KPMG’s annual automotive survey.
KPMG’s sixteenth Global Automotive Executive Survey surveyed 200 executives, of which 25 are from China - including automakers, suppliers, dealers, financial service providers, rental companies and mobility solution providers across 31 countries.
The survey finds that a majority of Chinese respondents (68 percent) expect the share of e-vehicles - including hybrid, battery cell and fuel cell electric vehicles - to be between 11 and 15 percent of overall new car registrations in 10 years time.
Danny Le, Partner and Head of Automotive, KPMG China, says: “China’s government and automotive industry have high hopes that e-vehicles will signal a new era in the world’s fastest growing car market. Not content with catching up with more established players in traditional combustion engine technology, China aspires to leapfrog rivals to become the premier market for e-mobility.”
Le continues: “Vehicle and battery cell production in China is still in its early stages, current electric models from domestic OEMs have not proven particularly popular with consumers. However, China has by far the world’s largest R&D budget, indicating a patient, mid-to-long-term perspective.”
Meanwhile, the survey notes that Chinese respondents also expect significant sales growth among all vehicle categories. Basic and small cars, as well as sports cars lead the trend with 84 percent of respondents indicating rising demand, reflecting a fast-maturing market. Seventy six percent of respondents said they think compact, midsize and pick-up vehicles will see higher sales, compared to mature markets which anticipate growth will be seen for smaller-sized cars, while sales of larger vehicles are set to decline.
The survey also indicated twenty Original Equipment Manufacturers (OEMs) are expected to gain larger global market share in the next five years, six of which are from China (This is down from 10 in 2014 and eight in 2013). However, China’s automotive market looks promising from other perspectives. It remains the top investment destination among the BRIC markets with two-thirds of respondents globally planning to increase investment, compared to 50-57 percent registered by Brazil, Russia and India.
Additionally, 62 percent of global respondents said they expect China will export over two million cars within two years, and South East Asia will provide China’s automakers, as well as those in BRIC markets, the strongest growth opportunities for the next 5 years.
In terms of additional survey findings for China, fuel efficiency (76 percent), enhanced vehicle lifespan (60 percent) and safety innovation and ergonomics & comfort (both at 56 percent) are critical factors when purchasing a car, the survey notes. Twenty eight percent of China respondents said environmental factors are extremely important, while only 12 percent highlighted the use of alternative fuel technologies.
Le concludes: “Rising air pollution in China, fuel costs, strict emission standards, and rapid urbanization will ensure the huge potential for electric cars is eventually realized, although this will require further innovation and disruption across the automotive eco-system, and help from regulations and tax incentives.”
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KPMG’s Global Automotive Executive Survey 2015 surveyed 200 senior executives including automaker, suppliers, dealers, financial service providers, rental companies and mobility solution providers from 31 countries between July and August 2014. Thirty nine percent of the respondents are based across Europe, Middle East and Africa, 36 percent in the Asia Pacific region and 26 percent in the Americas. All of the participants represent companies with annual revenues greater than USD100 million, and 39 percent work for organizations with revenues of over USD10 billion.
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 155 countries and have more than 162,000 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.
KPMG China has 16 offices in Beijing, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Hangzhou, Nanjing, Qingdao, Shanghai, Shenyang, Shenzhen, Tianjin, Xiamen, Hong Kong SAR and Macau SAR, with around 9,000 people.
KPMG China refers to the member firms of KPMG International in Mainland China, Hong Kong SAR and Macau SAR.