The global auto survey asked leading automotive executives how they plan to meet new challenges and lead in innovation and an evolving value chain over the next five years.
The survey provides the following trends of global automotive industry development in 2011:
Creating a Future Roadmap for the Automotive Industry, the KPMG 2011 Global Automotive Executive Survey, provides insight from over 200 global automakers, suppliers and dealers on expected challenges and opportunities in consumer trends, technology innovation; new business models; opportunities for growth and profitability; and emerging markets over the coming five to 10 years.
"In many ways, there is a two-tier global market in play," Lydia Petrashova, Partner, Head of Automotive, KPMG in Russia and the CIS, said. "More mature countries are struggling to cope with the problem of changing mobility behavior, while in up-and-coming regions there is a push to deliver a variety of cars to populations eager for greater mobility."
Consumer trends call for purpose-built vehicles and develop mobility solutions, especially on the developed markets
Population growth and urbanization is driving a significant change across the entire automotive landscape. A rise in low-emission zones and restricted access to inner city centers might be only the beginning, as new car-free cities like Masdar, United Arab Emirates demonstrate.
These emerging trends are the dominant view among respondents with seventy-three percent believing vehicles will be designed to specific purposes, and 76 percent saying that vehicle design will be determined by urban planning.
While the world waits for affordable electric vehicles, for which intensive R&D is currently underway, the study showed, ‘mobility service solutions' are what some respondents believe may be game-changing.
Note: Mobility Service Solutions is a term used in the automotive industry to describe emerging business models in which single or multiple providers offer (s) consumers a comprehensive transportation solution that may employ the short- term rental of a car or various modes of transport, getting the consumer from "A to B" as efficiently and cost-effectively as possible.
While only nine percent of respondents believe that mobility solutions will represent a significant part of their strategy, some automakers like Daimler, Peugeot, BMW and others are already investing in this area.
"Such a forward-thinking approach could become the competitive edge that accelerates companies in developed markets into a leadership position in a realigned automotive value chain," added Petrashova. Despite the fact that such international developments are hardly likely to affect Russian producers' strategies in the immediate future, the transport problem is already relevant to all cities, and approaches to solving them in developed countries should be taken into account now."
With the emergence of mobility service solutions - and fuel-efficiency still unequivocally the biggest consideration when purchasing a car - around 80 percent of respondents say that hybrid and electric vehicles will see the lion's share of growth of any vehicle category over the next five years. Nevertheless, many respondents are expecting a continued role for government, since they believe electric cars will not be affordable without subsidies anytime soon.
Overcapacity a concern but exporting to other markets offers a solution
Almost two-thirds of respondents believe the US is the most overbuilt with Japan and Germany following; interestingly enough even China and India are expected to reach noteworthy overcapacity within five years.
Most automakers believe that increasing exports to new markets could offer relief; however, with many OEMs building plants in new markets, export opportunities may be limited in the future.
"Russia lags behind the developing economies of China and India in building production capacity at this moment," said Petrashova. "If this continues, Russia risks becoming the main market for car exports from China and India, especially after they reach overcapacity. Recent government initiatives to encourage local production should help Russia catch up in this area."
New technologies and shifting responsibilities in the value chain
While a majority of respondents said electric cars will not be affordable to the mass market in the next five years, investment in this category is important – of all available alternative fuel technologies, almost 90 percent of respondents are planning to invest in hybrid systems, battery electric power or hydrogen fuel-cell technologies over the next five years.
In the race to lead in technology innovation in alternative fuels and powertrain technologies, 68 percent of major players are opting to enter into strategic alliances or joint ventures with suppliers rather than seek capital and go it alone. This view is shared mainly among global players in the EMEA and America's region; those in Asia Pacific are most likely to secure loans to fund these investments.
These movements could have significant implications for how the automotive value chain will evolve.
Alliances are a good way to get access to specialized technological know-how in addition to sharing risk and cost.
Half of those participating in the survey believe that, with strategic partnering so key to rapid technological innovation, the industry will see a value chain evolution with a new dynamic taking shape between OEMs, suppliers, new entrants and niche players.
"Alliance-building in Russia is also important at this moment," noted Petrashova. "This should help Russian producers reach another level of car production in terms of both quality and quantity more quickly and possibly, reduce the overall lag of industry. The creation of alliances not only between auto makers but also, and in particular, producers of car components, will help make Russian production more competitive."
About the survey
Two hundred automotive executives participated in the survey, of which over half were business unit heads or higher. Respondents represent all parts of the automotive value chain including Original Equipment Manufacturers, Tier 1, 2 and 3 suppliers and dealers.
Fifty-one percent of the executives were based in the Europe, Middle East and Africa region, 27 percent in Asia-Pacific and 22 percent in the Americas. All participants represent companies with annual revenues greater than US$100 million and more than a quarter works for firms with revenues greater than US$10 billion.