As fuel efficiency remains the top concern among a cost-conscious driving public, global automakers, in the absence of a clear course on electro-mobility, plan to continue to optimise the internal-combustion engine (ICE). However, they will also put a greater investment in hybrid plug-in fuel systems through 2018, according to the KPMG International 14th Global Automotive Executive Survey.
The continued uncertainty over electro-mobility technologies, as well as new trends in globalisation, rapid urbanisation and changing consumer behaviour are the key forces predicted to cause a big shift in the automotive landscape over the next five years, according to the report, Managing a Multidimensional Business Model, based on a survey of 200 auto executives from 31 countries.
“Together, these forces add considerable complexity to an OEM’s business model,” said Mathieu Meyer, KPMG’s Global Head of Automotive and a Partner of the German firm. “Whereas in the past, automakers concentrated on just producing ICE cars, now they must cope with a range of propulsion technologies, new trends such as car sharing, internet connectivity and the growing significance of emerging markets. It is indeed a hugely transformative time for the global auto industry.”
Consumer interest in fuel efficiency for cost reasons is the primary factor in vehicle purchasing decisions, according to 92 percent of survey respondents. Environmental concerns such as reducing CO2 emissions are still important but slipped from second place in the KPMG 2012 global auto survey to fourth this year. 29 percent of OEM and supplier executives say they will invest in downsizing and optimising ICE technology.
Just over half of respondents say that ICE optimisation will offer the greatest potential for clean, efficient engines for the next 6 to 10 years. “There is an increasing realisation that ICE has further scope for optimisation,” said Meyer.
“This a quite a turnaround in direction and a sign that some of the newer technologies are taking longer than expected to emerge.”
"Many manufacturers have already made significant advances in reducing emissions and increasing power,” saidGavin Maile, KPMG’s Africa Head of Automotive.
“Future reduction in emission targets and increases in fuel prices will result in new technology becoming more prevalent.” Investment in plug-in hybrid technology will be key for 24 percent of OEM and supplier respondents, while only an average of eight percent say they will invest in pure battery technologies.
OEM and supplier investment plans are also in close alignment with perceived consumer preferences for electric vehicle technology, with 36 percent of respondents expecting that consumer demand will be highest for plug-in hybrids over the next five years, followed by non plug-in hybrids (20 percent) which ranked first in the 2012 survey.
A distant fifth are pure battery-electrified vehicles (11 percent). “The changing views on pure hybrids, plug-ins, fuel cell and battery-powered vehicles reflect the uncertainty as to which will be the dominant technology,” Meyer continued. “In the short term, the individual driver is likely to prefer a hybrid, whereas fleets may opt for electric cars. However, it seems that pure electric vehicle power will not prevail, at least in the next decade.”
Meyer commented further: “Another critical consideration that the industry and public sector must address as we plan a future of electro-mobility is when and to what extent an affordable infrastructure will be in place to address the recharging requirements of large numbers of electrified vehicles.” Adds Maile,
“The payment mechanisms to recover the cost of this infrastructure and the electricity consumed must be considered, too.”
Interestingly, while the trend among cost-conscious consumers in mature markets is to downsize to smaller, more fuel-efficient vehicles, the reverse can be seen inemerging markets. Here buyers want larger, more upscale cars such as sport utility vehicles (SUVs), mid-size and multi-purpose vehicles (MPVs). Just 39 percent of respondents from mature markets, for example, expect market share for SUVs to increase; while 66 percent of respondents from the BRICS expect an increase in market share for this type of vehicle.
“The growth of the entry level segment in South Africa is a result of affordability issues rather than a desire to be more environmentally friendly,” comments Mr. Maile.
The way consumers purchase their vehicles is also changing particularly in the Americas where, according to 83 percent of respondents, online activity and intermediaries will increase. Respondents from Asia, however, expect the traditional dealer model to remain strong in countries in that region. Also altering the automotive landscape is a growing trend of ‘connected car’ technologies, where 54 percent cited its importance compared to 22 percent in the KPMG 2012 survey.
Technology companies are expected (42 percent) to have the lead over OEMs and Tier 1 suppliers for control of in-car technology over the next five years.