Analyses
27 jan 22

Hands up if you think the auto industry will bounce back to profitability?

A KPMG survey uncovers cautious optimism in the auto industry’s ability to see more profitable growth in the next five years.

Each year, KPMG conducts a survey of over 1000 automotive sector executives and publishes the findings in the Global Automotive Executive Survey. The report from 2021 reveals interesting insights into how the industry sees the future from the perspective of unprecedented challenge and change.

The GAES 2021, entitled: Industry Leaders Foresee Dramatic Changes - where the opportunities may lie, Frank Vancamp, Head of Automotive, KPMG Belgium, states: “Every facet of the automotive industry, from product development to manufacturing and distribution, is likely to undergo profound changes brought on by the convergence of the automotive and technology sectors. New entrants are raising billions with IPOs as they take on the established automakers that are, in turn, making big bets on new powertrains, partnerships, and acquisitions.”

What this means is that the industry is in a state of flux but there are encouraging signs that it won’t turn into a meltdown. Alongside this, there is also evidence of innovation.

Innovation within the automotive sector

Flying taxis, cars by subscription, ubiquitous and fast EV charging stations, big-tech car entrants – are some of the developments to expect in the next 10 years, according to the GAES. However, optimism varies by country, with only 49% confident in Germany about the prospects for more profitable growth, compared with 66% in the USA. In Europe, the political pressure from ESG challenges and the race to a low-carbon economy are straining business models, but also offer opportunities to test new mobility services.

“OEMs seem to have lost control of their technological agendas, and they need to rebuild their competitive advantages. Yet Europe is a fascinating laboratory for new mobility, and success here means securing the future of these innovations.” says Laurent Des Places, Partner, KPMG in France

Most respondents thought a seamless and hassle-free customer experience was the most important feature for consumers

The move to electrification

Most respondents to the survey thought EVs will reach cost parity with ICE vehicles by 2030. They also believe EVs can be widely adopted without government subsidies, although the majority still supports such programs. The survey finds EV adoption will depend on significant investments in DC fast-charging infrastructure, as 77 percent of executives think consumers will require charge times of under 30 minutes when traveling.

Unsurprisingly, executives foresee a fundamental change in how vehicles will be purchased. Most expect the majority of vehicles to be sold online by 2030. Three-quarters also predict more than 40 percent of vehicles will be sold directly by automakers, bypassing dealers.

“Automakers are still trying to develop viable subscription models. It is difficult, as they need to balance customer needs for flexibility and convenience against profitable fleet economics.” Richard Peberdy, Partner, KPMG in the U.K.

When asked who they thought customers would trust with the data generated by the vehicle, 42% voted for the manufacturer.

You can read a summary of the key findings of KPMG’s GAES, 2021, interact with the data and view graphics results by data, region, country, company type and size and respondent job title.

Image courtesy of KPMG

Authored by: Alison Pittaway