New technologies are putting the car industry to the test

The automotive industry is undergoing a significant upheaval, driven by new drive systems, innovative business models and changing customer expectations. This change not only leads to a growing variety of purchasing options for consumers, but also requires intensive research and development activities from car manufacturers: from electric vehicles and hybrid technologies to hydrogen fuel cells and alternative fuels.

The automotive and technology sectors are converging more and more - a process characterised by rapid innovation and strategic decisions, but also by the associated high risks. These far-reaching changes pose new challenges for established players, as they create space for new market participants. This makes it necessary for automotive companies to adapt their strategies to the changing circumstances in order to operate successfully on the market.

Cautious assessment of the market outlook

For this year's 24th Global Automotive Executive Survey (GAES), more than 1,000 automotive executives in 30 countries were asked about current changes. At a time when electric powertrains and autonomous driving technologies are gaining traction and optimised customer experiences are becoming increasingly important, unprecedented business opportunities are opening up. However, despite these opportunities, executives are more cautious about the market outlook than in previous years. Reasons for this include uncertainty as to whether investments in electromobility will pay off in the long term and possible shifts in market share that can be expected in the industry.

In the automotive industry, focussing on regional differences is becoming increasingly important. This includes customer preferences for drive systems and software applications, but also supply bottlenecks and security of supply. The existing trend towards nearshoring will be further intensified in this context.

Dr. Andreas Ries

Partner, Global and Germany Head of Automotive

KPMG AG Wirtschaftsprüfungsgesellschaft

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Only a few automotive companies in Germany expect profitable growth

The latest Global Automotive Executive Survey (GAES) shows that managers in the automotive industry are less optimistic about future profitable growth: only 34 per cent worldwide are confident that profits will increase over the next five years. Last year, the figure was 41 per cent. In Germany, corporate decision-makers are even more pessimistic: just 16 per cent of those surveyed expect profits to increase over the next five years.

Concerns about the security of supply of raw materials and components have decreased: only 49 per cent of global managers are still worried that the supply of oil, gas and other fossil fuels, followed by lithium, cobalt, nickel and other battery components, as well as rare earths and semiconductors, could come to a standstill. These concerns have also decreased significantly in Germany, indicating that companies have made their supply chains more stable and resilient. Concerns about increasing trade rules and regulations have also decreased among executives in the automotive industry globally and particularly in Germany.

Increasing investment in hybrid technologies

Less than a third (30 per cent) of new car sales in European countries will be electric vehicles (EVs) by 2030. Automotive industry executives believe that China will have the largest market share for battery-powered vehicles, followed by the US and Japan. In addition to pure electric drives, automotive companies are also focussing on hybrid technology in order to diversify their investments. Worldwide, 70 per cent of the executives surveyed believe that research and development spending on battery-powered electric vehicles will increase in the future. This figure is only slightly down on the previous year (72 per cent). On the other hand, investments in ICE technologies (internal combustion engines) are being reduced compared to the previous year, which indicates a shift towards more sustainable and environmentally friendly drives.

The EV market is seeing a major shift among the leading OEMs

According to our study, Tesla remains the market leader in the global and European market for electric vehicles. BMW and Audi are far behind Tesla in second and third place in a global comparison. BYD is expanding its position on the German market, leaving the major German OEMs behind in second place (behind Tesla). Apple makes an impressive leap in the Western European market ranking, indicating that the tech company has the potential to become a major player in the automotive market in the future.

The race for the best charging infrastructure

The competition for the best charging infrastructure for electric vehicles continues. Worldwide, 19 per cent of managers from the automotive industry believe that dedicated charging network operators and electricity suppliers are most likely to own and operate charging stations for electric vehicles. This corresponds to the assessment for Germany.

On the consumer side, respondents see a significant increase in demand for fast charging times. In Germany, 75 per cent of managers stated that consumers want an 80 per cent charge in 30 minutes or less. Last year, only 42 per cent said the same. In order to meet this demand, charging networks for electric vehicles need to become more efficient and effective.

Significant decline in sales via stationary car dealerships

Worldwide, only 31 per cent of managers in the automotive industry still believe that dealer models will be the most important form of new car sales in 2030. The assessment for Germany is almost identical to the global perspective. The reasons for the shift away from traditional car dealerships are the increasing spread of digital retail platforms and changing consumer preferences.

Artificial intelligence as a key technology

Artificial intelligence (AI) is crystallising as an important technology for automotive companies. This requires employees with the relevant skills. 25 per cent of managers worldwide and 34 per cent in Germany believe that AI software engineers will be in high demand in their company in the coming years. This indicates that the industry recognises the importance of AI and will invest in this new technology in order to remain competitive.

Technology companies as partners and competitors: The rise of "frenemies" in the auto industry

There is fierce competition for new revenue streams in the automotive industry worldwide and, according to our survey, car manufacturers are best positioned to claim these for themselves. They are followed by players such as Google and Apple as well as car dealers. In Germany, other tech players from the security systems sector and developers of third-party technologies are named ahead of car dealers.

Driving, Tesla is the undisputed leader, followed by technology companies and a few OEMs.

The executives surveyed for the study expect Apple and Google to enter the automotive market with their own vehicles, which will certainly be a turning point in the automotive industry.

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