A KPMG study looks at where automotive executives think the industry is going.
January 6, 2018
by PLANT STAFF
Smart technology, driverless vehicles and mobility as a service will revolutionize driving. PHOTO: FOTOLIA
New power trains, digital technology, mobility, autonomous vehicles and climate change are shaking up the global automotive industry. Traditional is being usurped by the evolutionary and revolutionary. So where is the industry heading?
KPMG LLP, the global audit, tax and advisory firm, surveyed 1,000 auto executives from around the world, including Canada, from all aspects of the industry, including OEMs, parts suppliers, ICT companies, services providers and dealers.
Here are some highlights:
Fifty per cent of executives say battery electric vehicles (BEVs) have overtaken connectivity and digitization as the top trend, but 62% believe they’ll eventually fail because of the difficulty setting up a user-friendly charging infrastructure. Most (78%) feel fuel cell vehicles will be the real breakthrough. Refuelling is faster at traditional gas stations versus 25 to 45 minutes for BEVs. But 76% believe the internal combustion engine (ICE) will continue to be important, while 53% say the diesel is pretty much dead, except for long transport hauls, because there aren’t a lot of alternatives for medium and heavy trucks.
Internal combustion still has some mileage left in it as electric alternatives are further developed and integrated into existing platforms, but KPMG says its share of the future market is going to decrease significantly. Based on demand-oriented development, alternative powertrains will increase from 4% in 2016 to only 7% in 2023. However, regulation aiming for set CO2 reduction goals will likely drive up the e-mobility share to 30% of global automotive production.
Over the next five years, 53% of executives plan to invest in plug-in hybrids, and 52% in ICE vehicles and full hybrids. KPMG surveyed 240 consumers on their purchasing preferences and found full hybrids are their first next car choice (36%), but 21% would still buy an ICE vehicle.
Measuring market share based on unit sales is outdated, say 71% of respondents and 83% expect a major business model disruption over the next five years around mobility and digital applications. Speaking of disruption, the industry is based on number of cars sold, but 59% believe consumers won’t want to own a car by 2025. Not owning isn’t strong now but look out as folks become fed up with parking and congestion, relying instead on Mobility as a Service. Autonomous driving will revolutionize the way we use cars and 68% of executives feel purchasing criteria of the past such as performance and speed, safety innovation, environmental friendliness or comfort will be irrelevant. And 89% say vehicle-independent features will be key.
The digital ecosystem will generate more revenues than the car’s hardware, say 83% of executives, while 82% agree a Silicon Valley company will launch the next car in four years. Looking ahead to 2025, 35% see OEMs offering vehicle dependent and independent services over the whole customer lifecycle as the favoured business model. And 15% say OEMs will become contract manufacturers for ICT companies.
This article appeared in the print edition of the AutoPLANT supplement to PLANT Magazine, October-November 2017.