Chinese automakers will continue to gain larger global market share in the next five years on the back of strong demand, finds KPMG’s annual automotive survey.
KPMG’s seventeenth Global Automotive Executive Survey features insights from 800 auto executives across 38 countries, including 100 from China; it also surveyed over 2,100 customers globally.
According to the survey findings, 20 Original Equipment Manufacturers (OEMs) are expected to gain larger global market share in the next five years, five of whom are from China. One sixth of the global executives said they will increase their investment in terms of production in China, followed by Germany (16 percent) and India (9 percent).
Huu-Hoi Tran, Partner and Head of Automotive China, KPMG China, says: “Despite alternative mobility options aimed to reduce traffic issues in the increasingly urbanized society, car ownership is still a priority and also a status symbol for Chinese consumers. The future is wide open, but Chinese OEMs may focus on the increasing demand for electric cars, especially in large cities. They are becoming more aware of the need for internet, communications and technologies and financial services, developing their business models to benefit the consumers.”
The survey also highlights that connectivity and digitalization as well as new powertrain systems are identified as the top key trends that will hold through to 2025 in China and globally.
Staying connected is of increasing importance for the auto industry. Half of the surveyed executives highlighted connectivity and digitalisation as key industry disrupters over the next decade, outpacing growth in emerging markets (this was highlighted as a top concern in the survey findings over the last three years). Hybrid electric vehicles and battery electric mobility ranked among the top three globally and in China.
Tran says: “Greater connectivity will open up huge potential for platform providers as well as innovative IT start-ups to provide disruptive solutions to benefit consumers.”
Business models are set to change in the near term, according to the findings. Eight tenths of global executives believe a major business model disruption in the next five years to be extremely likely or somewhat likely, up from 12 percent in 2015; China also sees growth from 20 percent last year to 95 percent in 2016. Meanwhile, over 90 percent of the executives in China expect disruption triggered by connectivity and digitalisation to affect automotive companies across all segments, including low costs, volumes and premiums, higher than the global findings (ranging between 74 and 84 percent).
Tran concludes: “China’s industry and structures are young and much more flexible compared to mature markets. Chinese executives are not bound in ‘old’ structures and believe in change and therefore much more in the impact to all segments. In addition, better connectivity provides an enhanced ability to co-ordinate established trends such as car-sharing and pooling schemes, which make better use of space in densely populated areas. As urbanisation grows and the Chinese economy and car sales experience slower growth, customer data could also become more lucrative than selling vehicles.”
– Ends –
In this year’s survey we have asked four times more executives than in the previous years to increase the relevance and informative value of regional aspects in our analyses. Therefore, this year 800 executives from all parts of the world, answered our questions, of whom around half are C-level executives or CEOs, Presidents or Chairperson. Around one third of the respondents are based in Western and Eastern Europe, while 13 percent come from China and also each 13 percent from North and South America. 16 percent of the executives are located in India & ASEAN and 12 percent in Mature Asia.
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 and for the first time also ICT companies. Over two-thirds of all participants act in companies with annual revenues greater than US$1 billion, of whom 40 percent even have revenues of more than US$ 10 billion. The survey was conducted online and took place between July and November 2015.
Also, for the first time 2,123 customers from around the world, 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 www.kpmg.com/GAES2016 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 2016 can be also found at www.kpmg.com/GAES2016.
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 155 countries and have more than 174,000 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.
In 1992, KPMG became the first international accounting network to be granted a joint venture licence in mainland China. KPMG China was also the first among the Big Four in mainland China to convert from a joint venture to a special general partnership, as of 1 August 2012. Additionally, the Hong Kong office can trace its origins to 1945. This early commitment to the China market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in the Chinese member firm’s appointment by some of China’s most prestigious companies.
Today, KPMG China has around 10,000 professionals working in 17 offices: Beijing, Beijing Zhongguancun, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Hangzhou, Nanjing, Qingdao, Shanghai, Shenyang, Shenzhen, Tianjin, Xiamen, Hong Kong SAR and Macau SAR. With a single management structure across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located.