[Auto] Automotive sector refocuses its business strategy on production and sales: KPMG

[SougarLord]

 

According to the 15 Global Survey of Automotive Executives 2014: Strategies for a rapidly evolving market, vehicle manufacturers are undergoing major changes: from strategic alliances to growth based on production and sales volume, with an emphasis on generating mobility technology and solutions for the survival of Original Equipment Manufacturers (OEMs) in the automotive value chain. In turn, he recognizes the growing power of Brazil, Russia, India and China (BRIC) and the rise of alternative powertrain technologies as one of the significant influences shaping this sector.

 

Consumers still want longer-lasting, fuel-efficient vehicles with automotive technology

 

Currently, the highest priority for car buyers is a long-life car with lower gas mileage (92 percent of executives surveyed say it is a priority for buyers).

 

Consumer preferences for alternative fuel technologies have taken a lower priority in the pursuit of economy. Less than half of those surveyed feel that this factor is decisive for buyers. However, having an innovative vehicle is another important consideration for consumers.

 

OEMs strategy shifts from strategic alliances to organic growth

 

Organic growth (based on production and sales volume) has overtaken alliances as the most preferred business strategy for 2014. This view is felt most strongly among OEMs in TRIAD countries (that is, the group of countries that generate more than 50 percent of the world's Gross Domestic Product (GDP).

 

Increase in alternative technologies

 

"Continued consumer concern about fuel efficiency and pollution prompts vehicle manufacturers to focus on pluggable hybrid and fuel cell technologies for the near future," according to Albrecht Ysenburg, Automotive Industry Lead Partner of KPMG in Mexico ".

 

According to the study, plug-in hybrids will lead the pack among electronic vehicles in the race to produce cleaner and more efficient cars.

 

Pluggable cars are expected to attract the highest demand for any electric vehicle, both for the TRIAD and BRIC markets. Fuel cell cars are also experiencing an increase in po[CENSORED]rity, with 69 percent of those surveyed viewing this technology as critical to future growth.

 

Despite this confidence, most of the investment from vehicle manufacturers will continue to decline in the Internal Combustion Engine (ICM), which could slow advances in electronic cars. 77 percent of the sample indicated that reducing and optimizing the MCI is a key aspect, compared with only 59 percent who leaned towards those battery-powered technologies.

 

It is estimated that TRIAD OEMs are twice as likely to invest in MCI reduction, considering that BRIC countries are more focused on various forms of electric mobility, such as plug-in hybrids and fully battery-electrified vehicles.

 

Change in driving technology among vehicle manufacturers

 

As vehicle manufacturers consider ways to grow organically, technology leadership could be critical to a company's survival. For Ysenburg: "The demand for autonomous driving is leading vehicle manufacturers to become providers of mobility solutions", as "there is a strong correlation between technological leadership and the ability to remain independent, and we can see this from the importance that vehicle manufacturers are giving technological advances to improve their mobile solutions ”. ´

 

With more technology integrated into today's vehicles, the self-driving trend becomes a real possibility for the market. However, only 14 percent of those surveyed feel that these vehicles represent one of the key industrial trends, even though these figures differ greatly by country. In BRIC countries, expectations for self-driving vehicles are higher (23 percent) than in TRIAD countries (11 percent).

 

Growth in urban centers moves the change of signals

 

As the world's po[CENSORED]tion grows, usage patterns and vehicle ownership change, and mobility solutions like carpooling

become increasingly po[CENSORED]r.

 

Many of the major automotive brands are moving into this space, even though they don't necessarily always involve a physical car, but rather a wide range of transportation options.

 

Respondents in TRIAD countries are the most optimistic about the potential of mobility solutions, with nearly half predicting that up to a third of city dwellers will use these services by 2029 (a huge increase compared to the results of the 2013 survey).

 

For Albrecht Ysenburg: “The growing trend of autonomous driving (the self-driving vehicle) may have a greater positive impact on the development of mobility solutions. In reality, the ability to 'order' a car to 'arrive' when you want it and go where you want to go could actually make owning it unnecessary. This could go a long way toward increasing models of mobility solutions, perhaps eliminating the need to own a second family car. "

 

Online sales will grow, but distributions will be split in the future

 

The future of automotive distributions is divided. 53 percent of respondents believe that automotive distribution models do not work for the future market, with online multi-brand and retail providers that could grow significantly.

 

The importance of the online model for car retail sales is growing 71 percent in 2014. Interestingly, only 60 percent of surveyed dealers feel the online route will prosper, suggesting a reluctance to acknowledge the shift to online sales.

 

Vehicle sales in emerging markets will accelerate

 

Eighty-five percent of those surveyed indicate that growth in the BRIC countries and other emerging markets is the biggest trend in the industry until 2025. “As the BRIC countries assume a greater share of the global market, executives face difficult decisions about how to How to expand the alliances and with whom to do it, as well as how to respond to the developing competition ”, indicated the Leading Partner of the Automotive Industry of KPMG in Mexico.

 

Furthermore, he added that: "With these challenges comes a massive opportunity for both manufacturers and distributors to tap into the incredible long-term potential."

 

However, such a prospect may not materialize as quickly as some executives predict. “Although the respondents are optimistic, this scenario will not be able to play out in some BRIC countries, where the quality levels of domestic vehicles do not match the standards of Western counterparts. To export to more mature markets, brand perceptions and distribution networks would have to improve significantly, ”Ysenburg said.

 

Sales are expected to skyrocket in the BRIC countries, as 7 of the first 10 OEMs expected to grow in the next 5 years will come from these nations. 66 percent of those surveyed predict that Russian manufacturer Avtovaz will be in the top three OEMs to gain market share, advancing 18 spots in the 2013 KPMG automotive survey.

 

Automotive Industry in Mexico

 

2013 was another record year for the automotive industry in Mexico, as more than 2.9 million units were produced (representing an increase of 1.7 percent over 2012), but below expectations for 2013. National sales they increased just 7.7 percent in 2013 (just over 1 million units). The automotive industry in Mexico represents more than 3 percent of its GDP: about 30,000 million dollars of revenue per year. In addition, it employs 500,000 workers and places Mexico as the eighth largest automobile producer in the world.

 

According to the Partner: “This industry continues to attract foreign investment and it is expected that, by 2017, it will produce 4 million cars. Exports to countries other than the United States are increasing, which reduces the close relationship with the performance of the US economy.

 

However, one of the main reasons for the success of the automotive industry from a production perspective is its geographic proximity to the United States. In addition to this justification, the following stand out:

 

- The labor is experienced and inexpensive.

 

- The free trade agreements that our country has signed with various markets.

 

It is expected that, over the next few years, the growth of sales in the domestic market will be continuous and around the 8 percent mentioned above. Domestic car sales are sure to hover around 2 million units.