Ninety-two percent of global executives surveyed say that low fuel consumption is a top priority for buyers. The latest safety innovations also remain a critical factor for consumers when choosing a vehicle, say 79 percent.
“The South African economy is showing low growth and large deficits, with the devaluation of the Rand. This is having a large impact on new vehicle prices and the cost of fuel, making these global trends very relevant for the SA Market” said Gavin Maile, KPMG Africa Automotive Sector Head.
Consumer preferences for alternative fuel technologies have taken a lower priority in the quest to economise. Less than half of respondents feel that this factor is critical to buyers. However, having a vehicle with the latest in-car technology is another important consideration to consumers.
The rise of alternative powertrain technologies is one of several significant influences shaping the global automotive sector. Automakers are undergoing changes on many other fronts: a shift from partnerships and alliances to organic growth strategies, the continued emphasis of mobility solutions and technology as critical to original equipment manufacturer (OEM) survival in the automotive value chain, and the increasing power of Brazil, Russia, India, China (BRIC) and Africa.
The majority of investment from automakers will continue to be in downsizing the Internal Combustion Engine (ICE), which could slow advances in e-vehicles, according to the survey. Seventy-six percent of respondents say that ICE downsizing and optimisation is a key issue, compared to just 59 percent for battery-powered technologies.
“Suprisingly sales of e-vehicles declined slightly in South Africa last year, said Maile. “The original cost, changes in technology and challenges with availability to recharge are factors impacting these sales.”
OEM strategy shifts from joint ventures and partnerships to organic growth
Organic growth has overtaken joint ventures and partnerships as the most favoured business strategy. Last year, respondents placed joint ventures and alliances as the main approach, while organic growth now tops the list. This view is felt most strongly amongst OEMs from the TRIAD countries, with 84 percent listing organic growth as their main business strategy. This significant response may be a result of challenges that are being experienced in current partnerships such as effective integration and finding synergies.
As automakers consider ways to grow organically, technology leadership could be critical to the survival of a company.
“The demand for autonomous driving is leading automakers to become mobility solutions providers,” said Mathieu Meyer, KPMG Global Head of Automotive. “There is a strong correlation between technological leadership and the ability to remain independent and we can see this from the importance that automakers are placing on technological advances to enhance their mobile solutions.”
With more software technology intrinsic to today’s vehicles, the self-driving car becomes a real possibility for the marketplace. However, only 14 percent of respondents feel that self-driving cars represent one of the key industry trends, although these figures differ widely by country.
As the world’s population grows, patterns of vehicle use and ownership are changing and mobility solutions like car sharing are becoming increasingly popular.
Many of the major automotive brands are moving into this space, even though it doesn’t always necessarily involve a physical automobile, but a range of transportation options.
Almost half of survey respondents feel that mobility solutions can deliver a profit within the next five years.
“The growing trend of autonomous driving [the self-driving car] can have a further positive impact on the development of mobility solutions,” noted Mr. Meyer. “The ability to ‘order’ a car to ‘arrive’ when you want it, and go where you want to go may make it unnecessary to actually own the car. This could greatly contribute to the rise of mobility solutions models, perhaps eliminating the need to own a second family car.”
The future of automotive dealerships is divided among respondents. Just over half of the respondents (53 percent) believe that the traditional models of automotive dealerships don’t work for the future market, with online retailing and multi-brand providers set to rise significantly.
The importance of the online model for retail automotive sales is growing to 71 percent in 2014. Interestingly, only 60 percent of dealers surveyed feel that the online route will thrive, suggesting a reluctance to acknowledge the shift to online sales.
A significant majority of respondents see emerging markets as a major growth engine for the auto industry: 85 percent say that growth in the BRICs and other potentially high-growth markets (Africa) is the biggest single industry trend until 2025.
“As the BRIC countries take up a greater share of the global market, auto executives face tough choices on how to expand and who to partner with, and how to respond to growing competition,” said Mr. Meyer. “However, with these challenges comes massive opportunity for both manufacturers and dealers to tap into incredible long-term potential.”
Sales are expected to surge in BRIC countries, as 7 out of the 10 top OEMs expected to grow in the next five years will come from BRICs countries. For example, 66 percent of respondents predict that Russian automaker Avtovaz, will be among the top three OEMs to gain market share, moving up from 21st place in the 2013 KPMG auto survey.