Automotive: Insights from KPMG’s 2016 Global Manufacturing Outlook

Auto: KPMG’s 2016 Global Manufacturing Outlook

Dieter Becker, KPMG’s Global Sector Chair of Automotive provides a perspective on the challenges and opportunities facing automotive manufacturers.

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Key automotive data points from KPMG’s 2016 Global Manufacturing Outlook

  • 43 percent of automotive respondents say they will make significant investments to launch one or more new services into the market
  • 22 percent will spend 10 percent or more of revenues on R&D over the next 2 years
  • 62 percent will place significant investment into IoT.

Sector insights from Dieter Becker, KPMG’s Global Sector Chair of Automotive

In the automotive sector, winning companies will be nimble, future-oriented, and prepared to invest in new technologies, new talent, and new strategic alliances. New technologies are coming from every direction, so auto companies have to broaden their radar to keep pace. In the future, horsepower may matter less than processing power.

For companies to thrive in this new environment, they must solve what we identified in a recent report as the ‘clockspeed dilemma’. On the one hand, car companies must obey a pace – a clockspeed – required of capital-intensive manufacturing businesses. But now they must also embrace a far faster clockspeed – actually, multiple faster clockspeeds – that result from new players entering the ecosystem, from technology giants to start-ups.

To succeed in this environment, we believe that the auto industry must reconcile these two different rates of change. It must act as if it were simultaneously in two worlds, moving at two different speeds. And this, in turn, will require the auto industry to institutionalize a faster-paced innovation capacity that dovetails with its current clockspeed.

If the auto industry can get this right, we expect to see a bright future for the sector overall. Stunning innovation – particularly in the convergence of autonomy, connectivity and mobility – are transforming the industry and the way we live our lives. 

But this will require virtually every aspect of the automotive business to change, from how cars are designed, produced and built to how they are marketed and sold – all the way through to the underlying economics and primary demand drivers. 

Disruption may be unnerving, but we firmly believe that there has never been a more exciting time to be part of the automotive industry.

Two key questions

Q: What is the greatest threat to growth for automotive manufacturers today?

Dieter: Disintermediation at the customer interface.

 

Q: What are automotive companies doing differently do drive growth?

Dieter: New business models based on ubiquitous connectivity.

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