The KPMG 2021 Global Automotive Executive Survey provides readers with a distinct perspective of the future of the sector. More than 1,100 executives in 31 countries expect to see a sweeping transformation of the sector in the next 5 to 10 years. The executives offer their insights on the major forces shaping the industry, from supply chain issues and powertrains, to changing consumer behavior and new technology entrants.
Amongst the biggest trends relevant to Europe, the political pressure from ESG challenges (and the race to a low-carbon economy) is forcing European automakers to substantially make changes to their business models, and also at the same time, offering them exciting opportunities to test out new mobility offerings. Even as global executives believe that by 2030, the share of Battery Electric Vehicles (BEVs) in Europe will be close to 50 percent (as percent of new vehicle sales), the biggest concern impeding the further rapid adoption of electric vehicles remains insufficient publicly available charging infrastructure in Europe. Making successes out of various partnerships by enabling rapid deployment of advanced battery charging tech and infrastructure remains the key to success in the evolving European EV market.
Most European executives also foresee that not only a majority of new vehicle purchases will be completed online by 2030, but also at least 40% of new vehicles will be sold directly by automakers in their home markets by 2030, bypassing traditional dealers. While automakers need to acquire significant new capabilities in digital sales, marketing, pricing, and transaction processing for direct selling to consumers, significant restructuring of dealer networks can put up additional challenges for traditional dealers. And with new vehicle subscriptions and online sales, automobiles will likely generate vast amounts of data that automakers may be able to monetize. However, automakers must reinforce consumers' trust in data privacy by investing heavily in cybersecurity solutions.
KPMG foresees intense competition and cooperation between traditional automotive players and new entrants as well as higher investments in areas of autonomous/connected vehicles, advanced digital technologies, battery reuse/recycle, and contract manufacturing. Given this impending disruption from new automakers and start-ups, how will traditional OEMs and suppliers compete? KPMG believes that many automakers and suppliers will not only divest non-strategic assets and raise cash to invest in new technologies, but also partake in unprecedented M&A activity in the next three years.
European executives are also concerned about a range of issues affecting the supply chain, including the price volatility and availability of semiconductors, and commodities, labor shortages or wage increases, and cost and complexity of regulations (including tariffs). Given these challenges in the supply chain, automotive OEMs and suppliers need to focus and work together on enhancing cooperation, and risk-sharing, as well as carefully consider any changes in tax laws as they redesign their value chains. The eventual restructuring of the automotive supply chain may not only open up opportunities for new acquisitions and mergers, but also for incorporating the sustainability mandate in supply chains more rigorously.
Many of the auto executives surveyed are excited about the market opportunities they see on the horizon, but there are wide variations of opinion about what the future will look like, how quickly things will change, and who the key players will be. Readers can go to our website to interact with the data and view graphical results by region, country, company type and size, and respondent title.
KPMG believes that automakers need to rebuild their competitive advantages in areas of digital customer transformation, supply chain, sustainability, and autonomous/connected vehicles. While much of the optimism among executives about the future may be well founded, the changes will undoubtedly produce both winners and losers, making executives' choices today even more critical.
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