Automotive executives predict a new competitive order by 2035

Key findings:

Technology is redrawing global automotive competition

• Fifty-one percent of executives surveyed expect software and digital technology to become their company's primary source of competitive differentiation by 2035.
• Forty-nine percent of respondents describe their software-defined products and over-the-air capabilities as established or embedded.
• Only 36 percent of AI and software initiatives have successfully scaled beyond pilot.
• 92 percent of companies surveyed require at least 12 months to deploy a new AI, digital or software capability enterprise wide.
• Fifty-seven percent of ASPAC respondents reported significant investment in AI and emerging technologies, compared with 52 percent in Europe and 48 percent in the Americas, as the region leads in autonomous-driving and ADAS integration.

China set to take center stage  

• Nearly half (48 percent) of the executives surveyed expect six of the world’s top 10 OEMs to be headquartered in China by 2035.
• The report associates future automotive value creation increasingly with software, batteries, intelligent electronics and AI-enabled services rather than traditional hardware alone. 

October 21, 2026

Software and digital technology are set to become the defining source of automotive competition, while executives increasingly expect China to play a leading role in the industry's future, according to KPMG International’s 26th Global Automotive Executive Survey.

The research, based on responses from 775 senior automotive executives worldwide, finds that 51 percent of respondents expect software and digital technology to become their company’s primary source of competitive differentiation by 2035. Forty-eight percent also expect six of the world’s top 10 OEMs to be headquartered in China by then. 

These expectations are forming against a backdrop of simultaneous disruption reshaping the industry’s competitive landscape. The findings suggest executives may be bracing for a decade of overlapping disruption, with technology, geopolitics, sustainability, operating pressures, customer expectations and business-model disruption converging at the same time and at similar levels of intensity.

The convergence of disruption is also turning transformation from a time-limited program into the industry’s baseline operating model, as fifty-two percent of respondents agree that continuous transformation is now the industry norm.

Competition is shifting towards AI, advanced driver-assistance systems, intelligent cockpits, software-defined vehicles and connected services. Fifty-one percent of respondents expect software and digital technology to become their primary source of competitive differentiation by 2035. Forty-nine percent already describe their software-defined products and over-the-air capabilities as established or embedded, while 42 percent report the same maturity in their overall software-defined vehicle strategy. 

Execution remains the critical gap. On average, only respondents shared that 36 percent of AI and software initiatives have scaled beyond pilot and been adopted across the organization. Ninety-two percent take at least 12 months to deploy a digital, software or AI capability enterprise-wide, including more than one-third that need over two years. 

Regional capabilities are also developing at different speeds. Fifty-seven percent of ASPAC respondents report significant investment in AI and emerging technologies, compared with 52 percent in Europe and 48 percent in the Americas. ASPAC leads in autonomous-driving and ADAS integration at 52 percent (Europe and the Americas are at 44 percent) and AI governance at 50 percent (Europe at 45 percent and the Americas at 39 percent).

But technology leadership is no longer determined by internal capabilities alone. As automotive software, AI and connected services evolve, companies increasingly recognize that future competitiveness will depend on the strength of their ecosystems as well as their technology investments. The share of value creation enabled by external partnerships and ecosystems is expected to rise from 30 percent today to 44 percent within three years. Trust is also becoming a key differentiator, with half of executives surveyed believing trust in digital and connected features will significantly influence which companies win or lose over the next three years.

The technology-led shift in value also helps frame executives’ expectations of a changing global competitive order. A growing share of respondents believe China will play an even more influential role in the global automotive landscape, with nearly half (48 percent) predicting that six of the top 10 OEMs will be headquartered there in 2035.

The report’s analysis points to China’s growing capabilities in electrification, software and digital innovation as the country becomes more influential in technology-led automotive value pools. The expectation of a stronger Chinese presence sits within a broader shift toward technology-led value creation across ASPAC.

The report also finds that value creation is expanding beyond the vehicle, with leading companies using their capabilities to pursue opportunities in areas including energy storage, defense applications, connected services and financial services. 

The 2026 KPMG Global Automotive Executive Survey is the 26th edition of KPMG’s annual research into strategic shifts in the automotive industry. The mixed-methods research comprises a quantitative survey of 775 senior automotive executives, qualitative interviews with nine senior KPMG automotive specialists and external industry leaders, and desk research. Respondents included 330 executives in Europe, 260 in ASPAC and 185 in the Americas. The report identifies 53 “Pacesetter” companies with annual revenue above US$1 billion, comprehensive or very good visibility of and active involvement in transformation initiatives, and self-reported outperformance on profit, operations and transformation.

Note: Percentages may not total 100 due to rounding. The prediction that six of the top 10 OEMs will be headquartered in China by 2035 reflects respondents’ expectations, not a KPMG forecast.

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Dannielle McAllister
Global Media Relations Manager
KPMG International                                                                                   

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