Over half of auto executives surveyed by KPMG expect China and India to increase investment in their own auto industry with China expected to become the most overbuilt emerging market in the next five years. A third of those surveyed believe that the solution to overcapacity is industry consolidation through joint ventures and to increase exports to existing and new markets.
KPMG automotive partner Mike Steventon, said: “From a market perspective, the rise of economies such as China and India is creating a new competitive world order. In many ways there is a two-tier global market in play. The more mature countries are struggling to cope with the problem of congestion and changing vehicle needs, while in up-and-coming regions there is a push to deliver low-cost cars to populations eager for greater mobility.”
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Over 80% of respondents expected Chinese auto brands to increase global market share by 2015 and almost three-quarters expected China to be most acquisitive in the automotive industry by 2015.
Two in five respondents expected Chinese cars to break into other markets in two to five years and the majority of respondents believed China would lead as the world’s largest car market by sales volume and production within five years.
Over 90% of auto executives see investment in hybrid systems, battery electric power or hydrogen fuel-cell technologies as a key priority over the next five years but reckon affordable electric cars will not be available to the mass market until 2015 and their introduction will be supported by government subsidies.
The future of cars will be influenced by urban planning and environmental restrictions.
Growth in the UK car sector will be driven by developing new products and technologies, according to the survey of about 200 global automakers.
Investment in new power train technologies such as hybrid and all electric remains a key priority for 93% of auto executives – over seven in 10 said they would enter into strategic alliances or joint ventures to fund the capital costs or to secure the necessary technology.
Steventon added: “One factor is common worldwide: the need to continue to develop the technology that will produce efficient, affordable electric vehicles. Even though the industry is still in recovery mode, the pace of technical leadership intensifies. With the rise of oil costs and fears over future supplies, it’s no real surprise that fuel efficiency is considered the single biggest factor for consumers when buying a vehicle. The challenge is whether in this period of fiscal belt tightening, governments can afford to subsidise the introduction of electric vehicles.”
Around 80% of respondents said hybrid and electric vehicles will see the lion’s share of growth of any vehicle category over the next five years. Nonetheless, many respondents are expecting a continued support role from government, since they believe electric cars will not be affordable without subsidies anytime soon.
Over four in 10 expected government subsidies to tail off with only a quarter expecting it to increase but almost 40% thought the most effective way of making electric vehicles affordable for mainstream buyers sooner was through government subsidies.
