Automotive executives believe strongly that consumers will be opting for fuel-efficient low-cost cars and hybrids over the next five years, over purchases of SUVs and luxury cars, according to the results of an annual global survey of automotive leaders by KPMG, the US-based audit, tax and advisory firm.
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The KPMG survey, based on interviews with 140 senior executives at vehicle manufacturers and automotive suppliers around the world, found that auto execs believe that quality and fuel efficiency will be the top-two criteria consumers will use in deciding which car to buy over the next five years.
“Automotive leaders are cognisant of the lasting impact of rising [petrol] prices on the minds of consumers,” said KPMG automotive practice audit partner Betsy Meter. “The focus right now is on producing fuel-efficient vehicles that will meet consumer demand.”
The executives were asked their opinions on a number of categories of vehicles over the next five years and ranked hybrid cars number one, at 88%, and low cost cars second, at 79%. Hybrids and low cost cars ranked significantly above all other categories, although the execs anticipate cars overall, at 59%, and cross-over vehicles, at 48%, to increase.
At the other end of the spectrum, most auto execs believe that sales of larger, less fuel-efficient vehicles will decline over the next five years, with only 35% predicting an increase in luxury-car sales and 36% expecting sales of sport-utility vehicles to rise. They were slightly more optimistic on minivans, at 40%. Only 24% expected pick-up trucks to increase market share in the next five years.
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By GlobalDataIn breaking the categories down into a regional view, North American execs were more likely see a rise in hybrids and low-cost cars in the next five years. Execs in both Europe and Asia were more optimistic on the sale of larger vehicles, such as minivans and SUVs, and Asian respondents are more optimistic about luxury vehicles and pick-up trucks, compared with their North American and European peers.
“While there are regional differences, there is one common theme,” added Meter. “Consumers worldwide are now on the same page. They desire a good quality, fuel efficient car.”
When it comes to what consumers will look for most in a new car, 87% of executives surveyed said that car-buyers would mostly base their purchase decision on quality while 84% said fuel efficiency. These factors ranked much higher than affordability, at 68%, and significantly higher than sales incentives, at 47%.
“The rise in [petrol] prices due to Hurricane Katrina left a lasting impression on the minds of consumers,” said Meter. “There is a limit as to what US consumers are willing to spend on fuel.”
Forty-five percent of the executives surveyed said that a sizable proportion of American consumers would begin to move away from less fuel-efficient vehicles if petrol prices rose to between US$3 and $3.50 a gallon. Another 20% said consumers would shift to more fuel-efficient vehicles if petrol prices stayed in the $2.75 to $3.00 range.
