KPMG EXECUTIVE SUMMARY

KPMG has published the results of its 18th annual Global Automotive Executive Survey, based on responses from almost 1,000 senior automotive executives and more than 2,400 consumers around the world.

The resultant report focused on three main areas: the conflict between evolutionary and revolutionary drivetrain technologies; the move from offline to online, and geopolitical and economic changes.

Lost in translation

“The auto industry is lost in translation between evolutionary, revolutionary and disruptive key trends that all need to be managed at the same time,” the report says.

The survey found that executives are torn between evolutionary and revolutionary drivetrain technologies, with 76 per cent believing the internal combustion engine will remain more important than electric drivetrains for a very long time. However, 53 per cent of respondents declared that diesel is dead.

Sixty-two per cent believed Battery Electric Vehicles (BEVs) would fail due to infrastructure, while 78 per cent said fuel cells would be the real breakthrough for electric vehicles.

“Execs are hesitant regarding cooperation and unsolved infrastructure challenges. The reason for execs to believe in fuel cells may be their strong attachment to the existing infrastructure and traditional vehicle applications,” the report says.

“Success of BEVs depends on infrastructure and application. Coordinated actions for infrastructure set-up and a clear distinction of reasonable application areas (e.g. urban, long-distance) needs to be established.”

Autonomous driving

“Autonomous driving will redefine the utility of vehicles and is the enabler for service and data-driven business models,” the report states.

Sixty-eight per cent of execs agreed that traditional purchasing criteria would become irrelevant, while 89 per cent said vehicle independent features would become key purchasing criteria.

“Strategic alliances and cooperations with players from converging industries will be the fundamental driving force,” KPMG stated.

“The full potential of technologies enabling autonomous driving can only be realised with the support of standards and the full power of swarm intelligence. Neither the auto nor the digital system will succeed on its own.”

From offline to online

A vast majority (85 per cent) of executives surveyed agreed that the digital ecosystem would generate greater revenue than the hardware of the car itself, while 83 per cent said they anticipated a major business model disruption within the next five years.

“OEMs have to decide whether they want to be a contract manufacturer or a customer-centric service provider (Grid Master),” the report says.

Thirty-five per cent of executives believed that OEMs would become the Grid Master, while just 15 per cent said OEMs would become contract manufacturers.

More than half (55 per cent) said OEMs would rather compete with players from Silicon Valley, and 82 per cent agreed that a Silicon Valley company would launch a car in the next four years.

Forty-nine per cent said OEMs were the most trustworthy when it came to zero-error tolerance, which will be one of the key factors in the mass adoption of autonomous vehicles, while just 25 per cent of consumers thought Silicon Valley newcomers were more trustworthy in this regard.

More than half (59 per cent) predicted that by 2025 less than half of today’s car owners would want to own a car, and 71 per cent said measuring market share based on unit sales was outdated.

“Management according to product profitability is over – customer value will become the core focus,” the report says.

Forty-one per cent of executives agreed that the OEM will take over the direct customer relationship.

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