- KPMG’s 24th Annual Global Automotive Executive Survey
- Growing consensus on growth expectations for EV market
- Seamless and hassle-free customer experience moves up in importance
KPMG has launched its 24th Annual Global Automotive Executive Survey report titled – ‘Getting real about the EV transition’. The report examines in detail how executive sentiment is changing and the concerns and challenges that make global automotive leaders more cautious.
Now in its 24th edition, the survey of 1,041 senior executives in thirty countries and territories reveals a dip in optimism as the sector deals with concerns over the global economy and rising costs. However, auto executives hold a more realistic view of the EV transition.
EV penetration outlook is maturing – with less variation in estimates market share for 2030
Executive expectations about the shift to electric powertrains continue to mature. In the past, when KPMG asked executives across the industry about how they expected EV penetration to trend in their markets, the responses varied widely. Now the range of estimates has narrowed, a sign of greater realism. Even so, the mean estimates for penetration rose in this year’s survey. In India, respondents feel that 20% of new vehicles sales will be battery-powered (excluding hybrids) by 2030.
Customer experience is a key differentiator
While performance remains the most important selling point, a seamless and hassle-free customer experience has moved up to second place. The emphasis on a smooth customer experience extends from buying the car to having seamless operating software in it, but the latter is a challenge for manufacturers. The car’s hardware is usually reliable, the software less so.
The software-defined vehicle provides an opportunity to supply all sorts of driver applications. But consumers are not likely to sign up for software subscriptions if the products aren’t compelling. In this year’s survey, OEM executives in particular are less confident than in previous years that they can generate subscription revenue. How good is cybersecurity? Widely publicised breaches have raised concerns about automotive cybersecurity. In our survey, executives are still confident that auto makers provide adequate cybersecurity and customer data protection, but they may be over-confident.
Gary Silberg, Global Head of Automotive at KPMG International, said “A year ago, we said that automotive executives sensed the future was theirs to seize. In the latest survey, more than 1,000 executives in 30 countries again said they see enormous opportunities. But they are becoming more sober in their assessment of market prospects. Having committed more than half a trillion dollars to the EV transition, the industry is asking when companies will see a return on the investment. Right now, almost all automakers are losing money on their battery-electric vehicles, possibly presaging a shakeout among EV manufacturers and suppliers.
Our 24th annual survey examines in detail how executive sentiment is changing and the concerns and challenges that make global automotive leaders more cautious. The upshot: to help ensure companies end up as winners, not losers, executives should rethink their strategies and ask themselves some difficult questions about potential shifting consumer habits, especially driven by a cost-of-living crisis, the possibility of fewer government subsidies, and how the industry can potentially vertically integrate, creating more efficient operating systems.
Finding the right answers to these and other strategic questions will help determine how companies succeed in the coming years. We believe that a dazzling future for the automotive business—with amazing products, more delighted consumers, and a positive impact on the planet—is still in view. But getting there will require overcoming near-term challenges.”
Vinodkumar Ramachandran, Partner, Head of Business Consulting, KPMG in India says, “Consumers are increasingly savvy and demanding about the technology in cars. Manufacturers should stay ahead of their competitors in offering the latest equipment in vehicles, advanced connectivity features, and enhanced safety technologies.”
Just in case is overtaking just in time
After the disruptions of the past few years the new norm in supply chain management is becoming “just in case,” rather than “just in time.” Companies are pursuing a wide range of strategies to build resilience and things are far better than two years ago. Still, there is a high level of concern about the continuity of supply for many commodities and components over the next five years.
The technology challenges grow more complex
In the latest survey, automakers indicated that they feel less prepared than in the previous year for advanced technologies, such as artificial intelligence, digital twins, and advanced robotics. Only 12 percent of auto executives said they felt extremely well prepared, down from 22 percent the year before. The change is likely associated with the rapid advances in artificial intelligence, particularly generative AI, which is expected to bring automation to white-collar jobs. Automakers are going to have to train more workers to take advantage of AI in all its forms and must compete with other industries to hire people with the requisite skills. When it comes to powertrain technology, this year more companies seem to be hedging their bets. Hybrid technologies have jumped from fourth to second place overall in technology.
Faced with so many challenges and opportunities, executives should recalibrate strategies—and act. KPMG’s Global Automotive Executive Survey team has outlined four key priorities for top leaders to better position them in the altered automotive business:
- Manufacturers should hedge their bets about the trajectory of both the internal combustion engine and all the alternatives. However, if they spread themselves too thin, they risk losing to competitors that more successfully predict the future and focus more narrowly. The answer, then, is to entertain heretical theories, employ a diverse array of talent with different perspectives, and make your best bets.
- Generative AI has captured the imagination of business leaders across industries and is vastly expanding access to AI. We believe AI technology will likely touch virtually every aspect of the automotive business, from the way autos are designed and manufactured to how they are sold and driven. The critical question for auto executives, then: Is your AI strategy sufficiently comprehensive and forward-looking?
- Car manufacturers have tended to go it alone when it comes to developing automotive technologies, often with unspectacular results. Given the array of business opportunities and the limited pool of skills, auto companies have little choice but to look outside for the ideas and know-how they need to supercharge their R&D operation.
