China

Details

  • Industry: Industrial Markets, Automotive, Global China Practice
  • Type: Press release
  • Date: 1/10/2013

For media enquiries, please contact:

Nina Mehra

Senior Manager
Media Relations

KPMG China

 +852 2140 2824 (Direct)

   +852 9724 6092 (Mobile)

 nina.mehra@kpmg.com

 

China is top investment choice for global automakers, says KPMG survey 

10 January 2013, Hong Kong

 

China is the top investment destination for global automakers due to significant domestic demand and export opportunities, according to KPMG’s fourteenth annual Global Automotive Executive Survey.

 

The survey, titled Managing a Multidimensional Business Model, interviewed 200 automotive executives across 31 countries. It found that 70 percent of respondents view China as their top choice for investments, ahead of other BRIC countries - India (63 percent), Russia (54 percent) and Brazil (48 percent). Additionally, 94 percent of respondents said they expect China to see growth in domestic vehicle sales, underpinned by the rising middle class and growing urbanization.

 

The survey also indicates that four Chinese manufacturers are expected to be among the top ten companies to gain global market share over the next five years. The BRIC markets are expected to account for nearly half of all global vehicle sales by 2018.

 

Andrew Thomson, Asia Pacific Head of Automotive and a Partner at KPMG China, says: “China remains a highly attractive market due to its long term growth potential. It is no surprise that automakers are playing some big bets in China, and doing so ahead of the other BRIC and TRIAD markets.”

 

By comparison, 87 percent of respondents said they expect India to see growth in domestic sales, followed by Brazil (80 percent) and Russia (76 percent).

 

Sport utility vehicles (SUVs) are the fastest growing car segment in China. According to the latest statistics from the China Association of Automobile Manufacturers (CAAM), the sales volume of SUVs rose 26 percent from January to November 2012, to 1.79 million units. This outpaced the 7.1 percent growth in overall car sales recorded for the same period.

 

Thomson adds: “While the trend among cost-conscious consumers in mature markets is to downsize to smaller, more fuel-efficient vehicles, a sizeable proportion of consumers in the BRIC markets still aspire to own bigger cars, such as SUVs. Innovative new concepts, such as rentals and leasing, as well as Mobility-As-A-Service (MaaS) models, also have potential for the future, given continuing urbanisation and the high density of the population in cities across the country.”

 

In terms of service, most global respondents agree that dealerships will have to evolve the quality, range and mix of what they provide in order to thrive in the future. Added-value services are rated as the most important offering, particularly in the BRIC markets, where dealership models are relatively under-developed and service quality can vary considerably.

 

Three-quarters of auto executives from the BRIC markets see great potential for such developments. Meanwhile, the retail environment in China is undergoing substantial change with, for example, the rapid expansion of automakers into the country’s western provinces to exploit the next wave of growth from Tier three, four and five cities in these regions. Also, service is moving up the agenda as customer expectations rise, while retail models and store environments are adapting to changing consumer tastes and behaviors – which in turn are heavily influenced by the growth of the internet and social media.

 

The auto industry also faces some challenges, the survey points out. For example, it appears to be getting harder to set up production facilities in the BRIC markets. In China, this may be a reflection of concerns about the level of fragmentation in how the automotive industry is structured in the country. Respondents also said that environmental restrictions will increase more than any other type of barrier, with 74 percent of auto executives indicating that such obstacles will become greater in China, up from 65 percent in 2012. Additionally, 52 percent said they expect government intervention to increase in 2013, while 54 percent believe import/export duties will rise in China. Meanwhile, overcapacity remains an ongoing challenge for the sector. One-fifth of respondents consider the risk of overcapacity in the BRIC markets as high or very high, with China being rated even higher at 26 percent.

 

In terms of emerging technologies, 36 percent of global respondents believe plug-in hybrid vehicles will attract the most consumer demand by 2018, powering ahead of conventional hybrids (20 percent), which topped the chart in previous surveys. Interestingly, for China, fuel cell technology was rated the most popular future option (44 percent), perhaps reflecting the relative lack of success to date of the country’s electric vehicle strategies.

 

The survey also noted that BRIC countries are expected to see a surge in vehicle sales, and that BRIC automakers are setting their sights on exports to new markets in the next 3 to 5 years, with the biggest growth opportunities likely to come in Southeast Asia and Eastern Europe.

 

Thomson concludes: “Going forward, we continue to see huge potential in the China market for both domestic and international players. This may be a year when we see more consolidation, as well as more mid-size automotive deals overseas, probably with a focus on acquiring key technologies.”

 

 

- Ends -

 


About the Survey

 

The KPMG Global Automotive Executive Survey 2012 - Managing a Multidimensional Business Model, surveyed 200 auto executives including automakers, suppliers, dealers, financial service providers, rental companies and mobility service providers from 31 countries. Thirty-nine percent of respondents are based in the Europe, Middle East and Africa region, 37 percent from Asia-Pacific and 24 percent from the Americas.

 

 

About KPMG

 

KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

 

KPMG China has 13 offices (including KPMG Advisory (China) Limited) in Beijing, Shenyang, Qingdao, Shanghai, Nanjing, Chengdu, Hangzhou, Fuzhou, Xiamen, Guangzhou, Shenzhen, Hong Kong and Macau, with around 9,000 professionals.

 

 

Get in touch with KPMG China

 


 

Subscribe to receive email alerts or e-Newsletters from KPMG China when new updates are available.

 

 

Featured report

KPMG’s Global Automotive Executive Survey 2013: Managing a multidimensional business model .

A range of global mega trends are blurring the traditional boundaries of the automotive model. Automakers face environmental challenges, growing urbanization, changing customer behavior and the growth of the emerging markets. These rapid changes are forcing a re-evaluation of traditional business models, as OEMs seek to broaden their core competencies and choose whether to move into multiple new areas or narrow their focus.