The current dynamic in the automotive industry reflects an unprecedented upheaval driven by new powertrains, innovative business models and changing customer expectations. This change is not only creating a growing variety of purchasing options for consumers, but is also challenging automotive manufacturers to engage in intensive research and development activities - from electric vehicles and hybrid technologies to hydrogen fuel cells and alternative fuels. At the same time, convergence with the technology sector is accelerating, characterised by rapid innovation and strategic decisions with the associated high risks. Focussing on regional differences is also becoming increasingly important. This not only affects customer preferences and regulatory requirements, but also the entire value chain and supply chains, which further strengthens the existing trend towards nearshoring. The focus of companies on local market conditions increases their flexibility to respond to diverse demands and regional adaptations.
The current era of the automotive industry is undoubtedly characterised by significant changes that not only pose new challenges for established players, but also create space for new market entrants. Automotive companies are faced with the challenge of adapting their strategies to the changing circumstances in order to remain competitive.
This year's 24th Global Automotive Executive Survey (GAES) provides valuable insights as more than 1,000 automotive executives in 30 countries were asked about the changes taking place. At a time when electric powertrains, self-driving technologies and enhanced customer experiences are advancing rapidly, unprecedented business opportunities are opening up. Despite these opportunities, executives are more cautious about the market outlook than in previous years. In particular, a key question is whether investments in electric mobility will pay off in the long term and what potential shifts in the industry can be expected.
Goran Mazar
Partner, EMA & German Head of ESG and Automotive
KPMG AG Wirtschaftsprüfungsgesellschaft
In the automotive industry, focussing on regional differences is becoming increasingly important. This includes customer preferences for drive systems and software applications, but also supply bottlenecks and security of supply. The existing trend towards nearshoring will be further intensified in this context.
Automotive executives are slightly less optimistic about profitable growth, but supply chain concerns are easing
Executives in the automotive industry are less optimistic about future profitable growth in the latest GAES: only 34% are confident that profits will increase over the next five years, compared to 41% in the previous year's survey. In Germany, only 16% of managers are extremely confident in this regard.
However, concerns about the security of supply of raw materials and components have decreased globally: only 49% of executives are concerned about the continuity of supply of oil, gas and other fossil fuels, followed by lithium, cobalt, nickel and other battery components as well as rare earths and semiconductors. In Germany, these concerns have also decreased significantly, indicating a more stable supply chain. Concerns about increasing trade rules and regulations have decreased among executives in the automotive industry worldwide and especially in Germany.
Less than a third of new vehicles sold in Europe will be e-vehicles by 2030, while investment in hybrid technologies is increasing at the same time
Less than a third (30%) of new car sales in European countries will be electric vehicles (EV) by 2030, according to the 2023 survey. Automotive industry executives believe that China will have the highest market share of battery-powered vehicles, followed by the US and Japan. However, automotive companies are diversifying their investments in electric vehicles by also putting more money into hybrid technology. Globally, 70% of automotive executives believe that research and development spending on battery electric vehicles will increase in the future, up from 72% in last year's survey. On the other hand, investment in ICE technologies (internal combustion engines) is being scaled back compared to the previous year, indicating a shift towards more sustainable and environmentally friendly powertrains.
The EV market is seeing a major shift among the leading OEMs
According to our latest Global Automotive Executive Survey, Tesla remains the market leader in the global and European market for electric vehicles. BMW and Audi are far behind Tesla in second and third place globally, while BYD is strengthening its position in the German market (in second place behind Tesla), leaving the major German OEMs behind. Apple makes an impressive jump in the Western European market ranking, suggesting that the tech company has the potential to become a major player in the automotive market in the future. The survey suggests that established car manufacturers need to invest more in EV technology and innovation to remain competitive in the market.
The race for the best charging infrastructure has not yet been decided
The competition for the best charging infrastructure for electric vehicles continues. Globally, executives believe that dedicated charging network operators and electricity suppliers (19% each) are best positioned to own and operate electric vehicle charging stations, followed by Tesla Supercharging networks (17%). In Germany, electricity suppliers and dedicated charging network operators are best positioned, followed by established oil companies and independent petrol station operators and the Tesla charging network. There is also a significant increase in consumer demand for fast charging times. In Germany, 75% of respondents say that consumers want an 80% charge in 30 minutes or less, which is significantly more than in the previous year (42%). This shows that charging networks for electric vehicles need to become more efficient and effective in order to meet the growing demand.
The industry expects that by 2030, more than two thirds of sales will no longer be made via stationary car dealerships
Globally, only 31% of executives in the automotive industry still believe that dealer models will be the most important form of new car sales in 2030, followed by direct sales by car manufacturers and digital retail platforms. The classification in Germany is almost identical to the global perspective, although the percentage of dealer models is not only higher than in the previous year (31% versus 37%), but also in comparison to the global results. The long-term shift away from traditional car dealerships is likely due to the increasing prevalence of digital retail platforms and changing consumer preferences.
The automotive industry's confidence in the introduction of new technologies is declining and AI skills are in greater demand as a top capability
Confidence in the automotive industry to successfully introduce new technologies has fallen. Only 40% of managers (previous year: 63%) in the automotive industry worldwide now believe that their company is very (30%) or extremely well (10%) prepared for advanced manufacturing technologies. In Germany, too, confidence has fallen drastically over the past year from 72% in the previous year to 30%. However, artificial intelligence (AI) has emerged as the most important skill for automotive companies in the coming years: 25% of managers worldwide and 34% in Germany believe that AI software engineers will be in high demand in their company in the coming years. This indicates that the industry recognises the importance of AI and is investing in this new technology in order to remain competitive.
Technology companies as partners and competitors: The rise of "frenemies" in the auto industry
There is fierce competition for new revenue streams in the automotive industry worldwide, and according to our survey, car manufacturers are best positioned to claim these for themselves. They are followed by players such as Google/Apple and car dealers. In Germany, other tech players from the field of safety systems and the developers of third-party technologies are also named ahead of car dealers.
In the field of autonomous driving, Tesla is the undisputed leader, followed by technology companies and a few OEMs.
In addition, executives expect Apple and Google to enter the automotive market with their own vehicles, which will certainly be a turning point in the automotive industry.
Automakers getting real about the future of mobility:
A European perspective
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