Connectivity, digitalisation and creating value out of data are identified by China’s auto executives as key trends to watch out for, finds KPMG’s latest annual automotive survey.
KPMG’s 18th Global Automotive Executive Survey gathered the opinions of around 1,000 executives from 42 countries – including 88 respondents from China. In addition, the survey compared opinions of more than 2,400 consumers globally.
While Battery Electric Vehicles (BEVs) technology was identified by half of the global respondents as the number one trend through till 2025, 64 percent of China respondents highlighted connectivity and digitalisation as strong disruptors for the automotive sector. BEVs and creating value out of data also ranked among the top three key trends in China.
Additionally, global automotive executives identified China as the top market to launch a new car or services, followed by the USA and Germany. China also ranks among the top three destinations to pilot a launch of a new data-driven business model. Executives expressed confidence in vehicle sales in China, with a majority of 76 percent indicating they expect the global share of vehicles sold in China to reach 40 percent by 2030 (up from the current 29 percent). Furthermore, the survey finds that 56 percent of global executives view China as a high growth market for traditional mass and volume manufactures as well as for premium manufacturers.
Huu-Hoi Tran, Partner and Head of Automotive China, KPMG China, says: “With an increasing number of connected consumers, China provides an ideal test environment for data-driven mobility concepts– both for mass customers as well as those in the premium and luxury segments. We see unlimited potential for mobility innovation across the different city tiers, tailoring mobility offers to individual requirements. Manufacturers therefore need to stay ahead of the curve, in order to retain market share in an increasingly competitive and innovative industry.”
According to the survey, more than four in five executives in China believe that one connected car can generate higher revenue over its entire lifecycle than 10 non-connected cars. It also highlights that a vast majority (94 percent) of Chinese executives agree that data is the fuel for the future model of auto companies, higher than the global average of 84 percent.
Tran adds: “To keep up with the connectivity and digitalisation trend, original equipment manufacturers (OEMs) will not exclusively make money with the hardware of the car itself, but even more with the digital ecosystem. Automotive companies will generate a service and customer-oriented business model in which data is the fuel.”
The survey finds that while 85 percent of global respondents agree that the digital ecosystem will generate higher revenue than the hardware of the car itself, executives in China (93 percent) are more confident than their global peers.
However, the key to success is whether consumers are willing to share their data, and how it is being handled, the report notes. In China, 86 percent of executives believe that consumers are likely to share their data, while 72 percent of consumers indicated they are willing to do so, both higher than the global average.
While both global and China consumers continue to consider themselves to be the sole owner of their data generated in a vehicle, companies in the information and communication technology (ICT) sector are increasingly gaining consumers’ confidence. In 2016, only 7 percent of both global and China consumers said they would trust their data in the hands of an ICT company, compared to 14 percent globally and 26 percent in China in 2017.
Daniel Chan, Partner, Sector Head of Industrial Manufacturing, KPMG China, says: “Data is gold. Security, trust and ownership are key, and the fact that different cultures handle data differently should be considered.”
For this year's survey we have asked more executives and covered a wider range of countries than at any time in the past. Half of our 953 respondents are CEOs, Presidents, Chairmen or C-level executives, providing us with even more reliable results about the opinions in the core of the automotive industry.
Our sample is split evenly between the upstream (product-driven) and the downstream (service-driven) market, with a stronger focus on ICT companies than in the previous years. Thereby we account for the latest developments in the market and keep track of the new players who challenge the industry.
Around one third of the executives are based in Western & Eastern Europe, 13 percent each come from North and South America and 15 percent originate from India & ASEAN. 9 percent of the executives come from China, 10 percent from the Mature Asia region with Japan and South Korea. Almost two thirds of our respondents act in companies with a revenue greater than US$1 billion, half of whom even have revenues of more than US$10 billion.
The survey was conducted online and took place between September and October 2016.
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