83% of Global Executives Forecast Growth in Automotive Industry... Electric Vehicle Market Share 'Plummets'

KPMG Survey of 915 Global Automotive Executives
78% of Executives Plan to Shift Vehicle Sales Online by 2030

[Asia Economy Reporter Lee Seon-ae] Global automotive executives foresee the automotive industry achieving more profitable growth over the next five years. However, they predict a significant decline in the market share of electric vehicles.

According to the ‘KPMG Global Automotive Industry Trends Report (23rd Global Automotive Executive Survey, GAES)’ released by the global accounting and consulting firm KPMG on the 22nd, 83% of automotive industry executives expect the industry to show growth based on high profitability over the next five years, a significant increase from 53% last year.

Now in its 23rd edition, this report surveyed 915 global automotive industry executives, with more than half of the respondents being senior executives such as CEOs. Thirty-eight percent (351 respondents) belong to companies with annual sales exceeding $1 billion (approximately 1.28 trillion KRW). By region, the highest response rates came from the United States (28%) and China (17%), followed by Europe at 29%, and other regions (including Korea, India, Japan, Australia, Canada, etc.) at 26%.

More than half (51%) of global automotive industry executives expressed being ‘very’ or ‘extremely concerned’ about the supply of raw materials such as lithium, rare earth elements, semiconductors, steel, and petroleum. Despite large-scale new investments in semiconductor manufacturing plants, semiconductor procurement remains a concern. They also responded that they are ‘very concerned’ about the supply of lightweight material components such as titanium, which affects battery weight.

Accordingly, the number of respondents who considered near-shoring and re-shoring more important than last year increased, and direct sourcing of raw materials and investment in suppliers were also mentioned as key factors.

The outlook for electric vehicles changed significantly in just one year. Executives predicted that by 2030, electric vehicles will account for about 40% of total vehicle sales, a sharp decrease from 70% last year. The report explained one reason for the expected decline in electric vehicle market share as “automakers undergoing complex and comprehensive changes throughout the entire process, including manufacturing, distribution, charging, and services, as they transition from internal combustion engines to batteries.”

Regarding electric vehicle subsidies, 82% of executives responded that electric vehicles could be commercialized without government subsidies within the next 10 years. Twenty-one percent said the government should not provide direct consumer subsidies for electric vehicles, explaining that subsidies distort the market and complicate international trade.

Eighty percent of executives selected driving performance as the most important factor influencing consumer purchase decisions over the next five years, a 9 percentage point increase from last year. The proportion of respondents who said brand image is ‘very important’ also rose significantly from 19% last year to 32% this year. As vehicle prices rise sharply, consumer expectations increase, and more new models become available, the importance of brand image has become more prominent.

Seventy-eight percent of respondents predicted that most vehicles will be sold online by 2030. Executives expect 34% of vehicle sales to be direct sales from manufacturers to consumers, with a similar volume sold through dealers. Additionally, new companies specializing in online vehicle sales and traditional e-commerce platforms are expected to become key players in sales.

Automotive company executives were also very optimistic about after-sale revenue prospects. Sixty-two percent are confident that consumers will willingly pay monthly subscription fees for software services such as electric charging, vehicle maintenance, advanced driver-assistance systems (ADAS), and entertainment services.

The survey also covered new market entrants. Apple rose from 9th place in 2021 to 4th place this year and is predicted to enter the automotive market and become a leader in electric vehicles by 2030. Tesla maintained its top position from last year.

Furthermore, nine out of ten respondents said startup companies will have a significant impact on the automotive industry, and more than one in five said there is a very high likelihood that companies will sell off non-strategic parts of their business considering the massive investments required for competition.

Vice President Wi Seung-hoon, Automotive Industry Leader at Samjong KPMG, stated, “In recent years, vulnerabilities in the automotive supply chain have become prominent. To mitigate supply chain risks, automotive companies are not only developing technology but also forming agreements or joint ventures with key suppliers and acquiring equity stakes in suppliers.”

This content was produced with the assistance of AI translation services.