John Leech, KPMG’s UK Head of Automotive, comments after Jaguar Land Rover announced it will create 800 new jobs in the UK and Honda plans to make 800 of its workers redundant:
“JLR and Honda’s announcements highlight that auto manufacturers’ fortunes are diverging. New trends in globalisation, rapid urbanisation and changing consumer behaviour will cause a big shift in the automotive landscape over the next five years. Whereas premium car makers are enjoying boom times, volume car makers continue to be in the doldrums.
“Producers of premium upscale cars are enjoying a surge in demand from emerging markets while manufacturers of smaller mass-market cars are struggling with the crash in demand from the Eurozone. We are seeing a divergence in profitability and capital for investment in future models creating a twin-track within the industry.”
“While the consumer trend in mature markets is to downsize to smaller, more fuel efficient vehicles, the reverse can be seen in emerging markets where buyers want larger, more upscale cars especially 4x4s. JLR has benefited from the desire of Chinese consumers for 4x4s in recent years and this trend is set to continue because at the moment only one in 18 Chinese of driver age own a car. Other carmakers have noticed this trend and are planning a number of 4x4 launches in China this year. Although his poses a threat to JLR its is hard to see rivals trumping the class-leading Range Rover.”
“The volume car plants here in the UK serve only the UK and European markets which have slowed down dramatically since last autumn. The Japanese-owned UK car plants have also been suffering from the high Yen which has been putting further pressure on their profitability. This comes at a time when the number of models and derivatives are exploding, new propulsion technologies are being researched and new trends such as car sharing and internet connectivity are changing business models and the value chain. It is indeed a hugely transformative time for the UK automotive industry.”
ENDS
Media Contact:
Katrin Boettger, Senior PR Manager
Tel: +44 207 896 4232 / 0782 4475168
Email: katrin.boettger@kpmg.co.uk
About KPMG:
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 professionals 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. KPMG International provides no client services.
