Future of automotive? Direct sales and subscription

In 2030, up to 60% of cars will be sold online – directly from OEMs to consumers. Subscription will compete with purchasing and leasing to be the main form of acquisition. Those are some of the forecasts made in KPMG’s 22nd annual Global Automotive Executive Survey. 

For its 2021 survey, KPMG polled 1,100 executives in 31 countries worldwide, right across the automotive spectrum. Headline result: they expect sweeping changes in the next 5 to 10 years, much of it to do with electrification and digitisation. In the shorter run, the execs remain concerned about supply chain problems and labour shortages. Some of the most eye-catching results:

Electrification

• By 2030, the executives predict, EVs will have just over half (52%) of the market share in Japan, China, and the U.S., and just under half (49%) in Western Europe, with smaller shares in Brazil (41%) and India (39%). However, those averages mask a wide spread from less than 20% to more than 80%, indicating great uncertainty about the degree of success of electrification. 
• 77% of the execs believe EVs will be widely adopted in the next 10 years without government intervention, yet 91% support government subsidies for EVs – although 76% believe they should be phased out for cars over $70,000. 
• Only half of all EV charging will take place at home, either in single-family driveways (30%) or at communal garages or parking lots (22%). So, the need for charging stations on streets, at work, and elsewhere is urgent. 
• Asked how long drivers would be willing to wait for an 80% recharge, 77% of those surveyed said no longer than 30 minutes. This highlights the need for many more DC fast-charging stations, which at present cost around $100,000 each, and represent less than 20% of public charge points. 

Digitisation 

• The car sales model of the future will be digital and dominated by OEMs. No less than 78% of execs think most new cars will be bought online by 2030, and 53% think up to 60% of new cars will be sold directly by OEMs to consumers by 2030. Meaning dealers will face yet another challenge to their business model. 
• By 2030, 84% of those surveyed think, subscription will compete with purchasing and leasing as the main acquisition method. And which type of company is most suited to offer subscriptions? 45% say OEMs, 22% dealers, 16% e-commerce platforms, 13% rental companies, and 4% start-ups.
• In-car data will increasingly be monetised. Of those surveyed, 43% think OEMs will be selling car data to insurers. Moreover, 42% think consumers would trust OEMs the most to safeguard their vehicle data, while just 19% think consumers would see the retailer/dealer as the most trusted data handler; with worse scores for suppliers (8%), mobility providers (6%) and the government (5%). 

New technologies

• Tell a car executive they can double their R&D budget. What would they spend the extra money on? 28% chose new powertrains, 23% ADAS and autonomy, 20% connectivity, 16% specialised forms of computing, and 13% light-weighting the vehicles.
• Attention for new areas has its flipside: 96% of respondents say they are likely to divest non-strategic parts of their business. 
• A majority of execs believes ride-hailing and delivery will be available within major cities in the US, China, Japan, and Western Europe. Tesla was by far the company thought most likely to dominate the autonomous vehicle solutions market, well ahead of Huawei, Cruise (GM and Honda), Waymo, and Motional (Hyundai and Aptiv). 
• Which of the major tech companies is most likely to enter the automotive space? The top candidates were Google (62%), Apple (60%), and Amazon (58%). 

Global outlook

• While 46% of executives remain very or extremely concerned about the impact of recent commodity-price volatility in 2022, an even greater share (55%) is very or extremely concerned about the impact of labor shortages in 2022. 
• Overall, 53% of those surveyed are confident that the auto industry will see more profitable growth in the next five years, with 38% being concerned.
• However, net confidence (i.e. confidence minus concern) varies strongly per country, with the U.S. (37%) and China (29%) the most optimistic, Japan (11%) and Germany (7%) in the middle and India (-26%) and France (-46%) the most pessimistic. 

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