Other challenges include the rise in popularity of hybrid cars in the e-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).

‘Continuing consumer concern with fuel efficiency and pollution is urging automakers to focus on plug-in hybrid engines for the near future,’ said John Leech, KPMG’s UK head of automotive. ‘Since the development of e-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.’

A total of 92% of respondents say that fuel efficiency for cost reasons is the primary factor in vehicle purchasing decisions; the same consensus as the KPMG 2013 global auto survey. 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 economise. Fewer than half of respondents feel that this factor is critical to buyers. Furthermore, more than seven out of ten say state-subsidies for e-car sales are key to further expansion.

The research also finds that plug-in vehicles are expected to attract the greatest demand of any e-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 e-vehicles, according to the survey.

A total of 76% of respondents say that combustion engine downsizing and optimisation is a key issue, compared to just 59% for battery-powered technologies.

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

KPMG adds that 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 and 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.’

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 feel 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,’ said Mr. Leech following the announcement of a review of the regulation and legislation surrounding the testing of self-driving cars at the 2013 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.

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.

KPGM also says that a significant majority of respondents see emerging markets as a major growth engine for the auto industry: 85% say that growth in the BRICs and other potentially high-growth markets is the biggest single industry trend until 2025.

In this year’s survey, respondents are increasingly optimistic about BRIC manufacturers increasing export volumes, with 44% confident that China will exceed two million vehicles within 2 years. Those that predict India will export one million cars within two years have also increased to 38%. Meanwhile, China is expected to account for one third of global new car sales by 2020, underlining its huge importance as a consumer market.

The greatest growth potential for BRIC OEMs is considered to be in South East Asia according to the survey, whereas Western Europe and North America continue to be largely off-limits for BRIC manufacturers. Since KPMG’s 2013 auto survey, a greater proportion of respondents feel that BRIC auto companies have good growth opportunities in Africa and Middle East.

Nevertheless, that outlook may not materialise as quickly as some respondents predict. ‘While survey respondents are optimistic, this scenario may not play out in some BRIC countries where the quality levels of domestic cars are not on a par with the standards of Western counterparts. To export into more mature markets, brand perceptions and distribution networks would have to improve significantly and that can take years if not decades,’ noted Mr Leech.


Sales are expected to surge in BRIC countries, as seven out of the 10 top OEMs expected to grow in the next 5 years will come from BRIC countries. For example, 66% of respondents predict that Russian automaker, Avtovaz, will be among the top three OEMs to gain market share, moving up from 21st place in the 2013 KPMG auto survey.