Fuel efficiency most important for car buyers and car sharing and driverless cars continue to develop

February 5th, 2014 by KPMG

According to KPMG International’s 2014 Global Automotive Executive Survey, cost conscious consumers are driving car manufacturers to focus on smaller engines and also the use of technology to create cleaner, more efficient vehicles.

The downsizing of engines, driven by consumer cutbacks, is one of several significant influences shaping the global automotive sector.

Automakers are undergoing changes on many other fronts: fuel efficiency being the number one priority for cash-strapped consumers, the rise in popularity of hybrid cars in the electric vehicle race, 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 and China (BRIC).

These issues are explored in-depth in KPMG’s 15th annual auto survey, Strategies for a Fast-Evolving Market.

John Leech, KPMG’s UK Head of Automotive said “continuing consumer concern with fuel efficiency and pollution is urging automakers to focus on plug-in hybrid engines for the near future.”

“Since the development of electric vehicle technology takes time, in parallel, automakers are also maintaining a strong grasp on downsizing the internal combustion engine, which is expected to deliver substantial improvement in fuel efficiency during this decade.”

Fuel efficiency for cost reasons is the primary factor in vehicle purchasing decisions for 92% or respondents to the survey, as the petrol pump price increases.

Enhanced vehicle lifespan has risen in importance for the third consecutive year, with 70% of respondents citing this factor as influential.

Environmental concerns such as reducing CO2 emissions are still important to the consumer, but slipped from second place in the KPMG 2012 global auto survey to fifth this year.

Consumer preferences for alternative fuel technologies have taken a lower priority in the quest to save money.

Fewer than half of respondents feel that this factor is critical to buyers.

More than 70% said that state-subsidies for electric car sales are key to further expansion.

Plug-in vehicles are expected to attract the greatest demand of any electric vehicle, for North American, (western) European and Japanese and the BRIC markets.

Fuel cell vehicles are also experiencing a rise in popularity with 69% of respondents considering this technology as critical to future growth by the end of the next decade.

Despite this confidence, the majority of investment from automakers will continue to be in downsizing the internal combustion engine, which could slow advances in electric vehicles, according to the survey.

Combustion engine downsizing and optimisation is a key issue for 62% of the survey respondents, compared to just 59% for battery-powered vehicles.

UK, North American, (western) European and Japanese OEM’s are twice as likely to invest in internal combustion engine downsizing, whereas BRIC countries are more focused on the various forms of electric mobility, like plug-in hybrids and pure battery electrified vehicles.

Mr. Leech said “this a quite a turnaround in direction and a sign that some of the newer electric technologies are taking longer than expected to emerge.”

“This will benefit the UK in the short-term (which is the second largest manufacturer of combustion engine cars in Europe) and, in particular, UK suppliers of turbochargers and direct injection petrol-engine components.”

As automakers consider ways to grow organically, technology leadership could be critical to the survival of a company.

“The demand for self-driving is leading automakers to become mobility solutions providers,” said Mr. Leech.

“There is a strong correlation between technological leadership and the ability to remain independent.”

“We can see this from the importance that automakers are placing on technological advances to enhance their mobility solutions.”

“This year we will see the launch of traffic-jam assist features and head-up displays in some cars which, together with self-parking and cruise control, signal the start of a gradual creep of the car taking over certain aspects of driving,” Mr. Leech said.

With more software technology intrinsic to today’s vehicles, the self-driving car becomes a real possibility for the marketplace during the next decade.

However, only 14% of respondents felt that self-driving cars represent one of the key industry trends, although these figures differ widely by country.

In the BRIC countries, the expectations for self-driving cars are higher (23%) than in the North American, (western) European and Japanese markets (11%).

“The focus on innovation by the British government will help the UK to play a role in the development of self-driving cars,” Mr. Leech said, following the announcement of a review of the regulation and legislation surrounding the testing of self-driving cars at the 2013 UK Chancellor of the Exchequer‘s Autumn Statement.

“Plans to review the regulation and legislation that applies to the testing of driverless cars in the UK by global car manufacturers will help promote the UK as a good place to develop driverless car technology.”

The rapid growth and increasing congestion of urban areas, coupled with changing consumer thinking on car ownership in cities, is giving rise to a keen interest in new solutions to owning transport such as car-sharing.

In the UK, Daimler’s Car-2-Go point-to-point car-sharing was successfully launched in parts of London and Birmingham in 2013, joining a number of other initiatives.

Many of the major automotive brands are moving into this space, and almost half of survey respondents feel that mobility solutions can deliver a profit within the next five years.

Respondents from the UK, North American, (western) European and Japanese countries are the most optimistic of the potential for mobility solutions, with almost half forecasting that up to a quarter of city inhabitants will use these services by 2029—a huge increase on the survey results from 2013.

“The growing trend of the self-driving car can have a further positive impact on the development of mobility solutions,” Mr. Leech said

“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 solution models, perhaps eliminating the need to own a second family car.”


1 Response to “Fuel efficiency most important for car buyers and car sharing and driverless cars continue to develop”

  1. rosie dorey

    It would be nice to see that they were also working on developing smaller urban cars that would be suitable options for Guernsey with our narrow roads. The general trend towards cars getting ever bigger does not help the crowing on our roads and is a real disincentive to more people walking or cycling.

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