COVID-19 accelerates the end of the traditional global automotive market

In its 21st consecutive year, we have more executive opinions and analyses than ever before. KPMG’s Global Automotive Executive Survey allows you to dive into the responses of more than 1,100 senior executives from the world’s leading automotive and ICT players. Additionally, our survey also presents the opinions and expectations of more than 2,000 consumers from 30 countries on current and future trends in the industry.

We invite you to explore our interactive platform with which you can tailor the results of our respondents to your interests and needs by filtering according to country of origin, stakeholder, various demographic characteristics and more.

KPMG’s Automotive Institute expects that the time lag in the supply and supply chain will trigger two approximately 5-month waves, during which production capacity utilization will fluctuate. Manufacturers should definitely take these wave-like movements into account in their current scenario calculations.

Consequently, the majority of companies report that COVID-19 will have a direct impact on their 2020 revenues. Many companies do not have enough staff to run a full production line or are already having to adapt production due to less demand. KPMG’s Automotive Institute is convinced that automotive industry players will not be able to survive a similar second COVID-19 wave with the same restrictive lockdown consequences.

From 2010 to 2019, Western Europe’s share in global production of passenger cars and light commercial vehicles decreased from 18 % to 15 %. Meanwhile, China accounted for 27% in 2019. With the expectation that COVID-19 will have a greater impact on the automotive industry in Western Europe than in China, we will likely see a further reduction in the production share accounted for by Western Europe this year.

KPMG report has showed a 9 % increase since last year among global executives who agree with the statement that “By 2030 less than 5% of global car production will occur in Western Europe”, with 76% of executives now either absolutely or partially agreeing.

In the course of recent years, public transport has already come under pressure, because people with smaller budgets were able to upgrade to personal mobility via shared or mobility-on-demand offerings. People will likely move away from public transport and are willing to spend more money to feel safe –China’s panic-like fear of disease and fever has led to an increasing demand in the high-end and low-end sectors.

As a result of the crisis, customers now regard vehicles as a means of protection for their personal safety more than ever before,” said Dieter Becker, Global Head of Automotive at KPMG. “They will therefore carefully weigh their budget and personal health against each other. This is where manufacturers should position themselves and begin to intensify their customer relationships. In times of uncertainty and increased cost awareness on the part of consumers, this includes the development of flexible and inexpensive contract offers for new vehicles. Customer mobility decisions will be driven by data privacy & security, TCO, and a seamless and smooth mobility experience.

For the first time in the 21-year history of KPMG's Global Automotive Survey, the experts surveyed no longer believe that ICEs will have the largest market share in the future. Most of them assume that by 2030 the various types of powertrains will be more or less equally represented in the market.

KPMG survey respondents from the Eastern European region consider battery electric mobility to be a key trend until 2030.

Among the Slovak car manufacturers, Peugeot Citroën and Volkswagen have already included electric cars in their production. According to the released information, currently no other VW group plant has such a high share of electric vehicles in its portfolio as in Bratislava's plant. In the Žilina-based Kia plant they are working on the C-segment electric car, the Jaguar Land Rover plant in Nitra is preparing for production of new hybrids.

When asked how they expect the number of physical retail outlets will develop over the next 5 years, more than 60% of executives say they believe the number will decrease between 20-30% worldwide.

Customers will expect to have one “go-to support organization” fully dedicated to in-vehicle software – an area far removed from the comfort zone of the traditional retailer we know today.

When over 2,000 consumers were asked in which segment they would most likely buy a car online, on average more than 40% of consumers in the mid-price segment can most imagine purchasing a car online, but with 20% of the consumers there are still many who would not buy a car online at all.

Eastern European customers who would be willing to buy a car online would primarily consider the price advantage; the satisfaction guarantees offered (e.g. full refund within first 3 months) and also trust in manufacturer’s brand.

For KPMG’s 21st “Global Automotive Executive Survey”, more than 1,100 executives in the automotive and technology industries and over 2,000 consumers from 30 countries were surveyed online in February 2020. 59 percent of decision-makers work for companies with a turnover of more than USD 1 billion, 22 percent in companies with more than USD 10 billion turnover. To review the complete survey results in an interactive format, please visit automotive-institute.kpmg.de.