Offline and online world will move the automotive industry into a new dimension: KPMG International survey

Offline & online world moves auto industry to new realm

Head of External Communications, Global Industries

KPMG International

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There is no money to be made in building cars in the future. This is one of the results revealed by KPMG International’s Global Automotive Executive Survey 2017 released in conjunction with the upcoming Consumer Electronics Show in Las Vegas. But what will be the next source of profit for automakers? Customers, their data or the digital eco-system?

Already today 85 percent of the close to 1000 automotive executives from 42 countries that KPMG International surveyed are convinced that their company will generate higher revenues with a digital ecosystem than with selling cars alone.

There will be no complete fusion of the automotive and the digital world – but a co-integration on the next higher dimension

Dieter Becker, KPMG’s Global Chair of Automotive comments:

“The results of this year’s survey show in particular one fact: The auto industry is between two worlds, one is offline, the other online – and there will be no fusion of these two worlds in the long run. What we need is an additional dimension. On this dimension both worlds are coexistent and interlocked. It is not yet decided who occupies which place in the new value chain. However, there is no doubt that the customer has to be the center of this newly emerging orbit.”

Powertrain beats digitalization – again

Last year’s survey results suggested that automakers are planning to make themselves future-proof and focus solely on the digital age and connectivity as they rated these two as the number one key trends. However, this year, powertrains came back to the top of the agenda with 50 percent of the executives rating it as top trend – one step ahead of digitization and connectivity.

Dieter Becker, KPMG’s Global Chair of Automotive comments:

“It is obvious that the carmakers are in a dilemma between making the right investment decisions, meeting the CO2 targets and managing different development cycles. Classic internal combustion engines will definitely remain technologically relevant – more than 75 percent of the executives say so. However, they are currently socially unacceptable, just like diesel. Every second executive believes that diesel will be the first powertrain technology to disappear from the manufacturing portfolio.”

Assembling environmentally friendly powertrain technologies will not be sufficient to achieve a breakthrough in electric mobility. KPMG’s results show that the executives heavily support electric vehicles, but on the other hand have many questions on standards, infrastructure, usability, energy supply and the meaningful application of fully battery electric vehicles need further clarification.

Number of sold vehicles are not the be-all and end-all any more.

"For the auto industry this implies that pure product profitability is outdated. Carmakers’ success will not be evaluated solely on the quantity of vehicles sold, but on the customer value over the whole lifecycle, especially when the digital ecosystem will be ready for the market,” states Becker. “So OEMs need to rethink. Over the long term, only market players winning both customers and their data track will prevail. Because this is the way to succeed in the digital ecosystem. More than three out of four executives believe that one connected car can generate higher revenues over the entire lifecycle than 10 non-connected cars.”

An ecosystem will be essential for future success

The only possible solution for the dilemma between the automobile and the digital world is an integration of all upstream and downstream elements in one virtual cloud ecosystem. This system connects and unites all market participants - end consumer and ICT companies as well as traditional hardware providers.

Further questions discussed in KPMG’s Global Automotive Executive Survey 2017:

  • Who owns the valuable customer and vehicle data generated in a connected vehicle? Whom do customers trust with their data and what compensation do they expect?
  • How will the new market entrants from Silicon Valley change the automotive industry? Can the existing tie between the customer and the traditional carmaker hold?
  • Will Europe really lose ground, as 65 percent of executives predict less than 5 percent of global production in 2030 to take place in Western Europe? Will China continue its triumph in the long run and even become leading in innovation? India is said to replace China on the pole position – is this realistic?

This is how KPMG’s Global Executive Survey came into existence in its 18th consecutive year

Almost 1000 senior executives working for vehicle manufacturers, suppliers, dealers, financial and mobility service providers as well as ICT companies gave us their valuable insights on the topics and trends the industry is facing today and even more in the future. As the customer is at the center of a connected world, an additional 2400 consumers were asked in order to directly compare their opinion to the executives’ perspective.

Individualization is key – also for KPMG International’s Automotive practice

This is why we invite you to visit our interactive dashboard including all results directly via your browser. Starting 3 January 2017, you will find every analysis conducted in the survey, equipped with individual filter options for regions, countries, target groups, and many more. There is no registration required.

About the KPMG Internationals Global Automotive Executive Survey 2017

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 and Eastern Europe, 13 percent each come from North and South America and 15 percent originate from India and ASEAN. Nine 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.

About KPMG International

KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 152 countries and have 189,000 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.

For more information, please contact:

Carolyn Forest

KPMG International

+1 416 777 3857

cforest@kpmg.ca

The views and opinions expressed herein are the personal opinions of the interviewees and authors based on their personal experience working as Auditors in the industry and do not necessarily represent the views or opinions of KPMG International or any KPMG member firm.

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