Executives expect a major business model disruption by the end of this decade.
Auto industry executives agree: connectivity and digitalization is the number one most important trend that will hold through to 2025. According to the 17th annual KPMG International Global Automotive Executive Survey (GAES) released today, this is a significant jump from its ranking 10th last year.
This year, 800 auto executives from 38 countries gave their insights to KPMG on topics such as business model disruptions, connectivity and digitalization, customer data, new products and who will be the winners or losers in this industry undergoing massive change. To give further insights and ‘reality checks’ to the industry, KPMG also surveyed over 2100 customers from around the world.
According to KPMG’s GAES major business model disruption is extremely likely for around 10 times more of the auto executives surveyed this year compared to last year—82 percent of the auto executives surveyed estimate a major business model disruption in the next five years to be extremely likely or somewhat likely.
Dieter Becker, KPMG’s Global Head of Automotive, comments: “Nothing will stay as it is in the automotive industry. Ever-changing service and data-driven business models should be paving the way towards owning, securing and keeping the key stakeholder–the customer. In order to meet their current needs, becoming a customer-oriented service provider is of utmost importance. One way traditional car makers can add value and offer customized client experiences is by leveraging the massive amounts of data that both the car and its driver(s) produce.”
However, according to the KPMG GAES report, the majority of auto executives say the use of data and the application of informational engineering is still at the very beginning stages. Around 70 percent of the auto executives state that data use is in an early stage some even state that there is no usage at all.
Thirty-two percent of the auto executives surveyed believe that auto buyers trust OEMs (car makers) the most as the ‘owner’ of the data generated from their vehicle. However, 54 percent of the over 2100 customers surveyed say that they trust only themselves with the data generated in their car.
According to Becker: “Indeed, customers are aware of the value of their data and KPMG’s GAES results show that for these stakeholders, cash is king. When given the option to rank several response choices, 82 percent of the customer respondents across all age groups say that monetary benefits for their data is the number one/most attractive benefit desired; followed closely by ‘customer incentive schemes’ (75 percent), and individualized service and customer experience over the whole customer lifecycle (71 percent).”
Auto executives place high importance across all benefits they would offer to customers for their data; which suggests they are unsure of where to place their bets. Different from customers, auto executives place monetary benefits (82 percent) behind equal figures for individualized service and customer experience over the whole customer lifecycle and ‘customer incentive schemes’ (88 percent for both).
The survey results also show that receiving nothing in exchange for data is not attractive to customers (30 percent – 4th place), yet still 43 percent of the executives surveyed believe doing nothing is acceptable.
Auto executives responding to this year’s survey are projecting that Toyota will have the largest market share among OEMs in the next five years (58 percent). Toyota has made the biggest leap ahead among OEMs—moving from ninth place last year to first this year. Yet the competition is supremely strong: GAES respondents place BMW and Volkswagen just one to two points behind (57 and 56 percent respectively).
Last year’s owner of the top spot, Hyundai, has fallen to fourth place this year with 50 percent of respondents expecting an increase in market share. Hyundai is followed by Ford at number five with 49 percent. In general, most auto executives responding to the survey are optimistic and only few expect a decrease in any of the OEMs market share. For many of the OEMs, respondents see stability in their future. For instance, while 34 percent of respondents expect Daimler to have an increase in market share, 53 percent expect them to remain stable. This is similar for the ‘new player’ Tesla, which is expected to increase in market share by 37 percent of respondents yet remain stable by 52 percent of respondents.
This year, according to KPMG’s GAES, BMW and Toyota will also be the leaders in the fields of e-mobility and autonomous driving. They are also ranked in the top spots as being the most groundbreaking innovators in the future followed by Honda, Ford and Tesla.
Becker comments: “Some may ask how it is possible that two traditional players are occupying the first two ranks in fields of electro mobility, ahead of Tesla, the former master of e-mobility? The results are not surprising, as especially BMW has established a strong e-mobility brand with their i8 and i3 models, which are leading the way for electric cars. Toyota is currently building up a new future oriented and innovative image with the fuel cell model Mirai to which customers and media had a positive reaction. However, although fully electric vehicles like the Tesla Model S/X have got a lot of attention over the last year, the total amount of fully electric vehicles and their applicability for daily use is still far away from the mainstream needs of today’s customers.”
The executives surveyed are optimistic that traditional manufacturers will be the groundbreaking innovators in the future. However, as they are facing a new highly digitalized and connected age with numerous new players, OEMs seem to be aware that these developments are not (yet) reflected in their business models.
More than one third (35 percent) of all respondents however expect traditional auto companies to be the groundbreaking innovators within the industry and among new market entrants in the next five years. They are followed directly by ICT companies in second place with 30 percent of respondents, predominantly naming Google and Apple in this context. Other players, including Mobile Payment Providers, New Financial Services Providers and Start-ups, are only seen by few executives as the overall future innovators.
However, by having a closer look at the view of the different stakeholder groups participating in the survey it is most surprising that OEMs themselves expect ICT companies (35 percent) to be the most groundbreaking innovators in the future—not traditional automotive companies, and therefore not themselves. The executives from the ICT companies on the other side are convinced that they themselves will be the leaders in fields of innovation over the next five years (53 percent) – far ahead of all other players or market entrants.
Becker concludes: “We believe these changes will help to convert the industry into the next development cycle and we should see these changes as a huge chance and not as a risk.”
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 Chairpeople. 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.
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