Four out of five directors believe that the Chinese car industry will fortify its market position while more than half of them believe that North American cars will loose market share. In 10 years they believe that Chinese car manufacturers will represent a major part of car sales in the US.
- As the industry is focusing its research and development on growing Asian economies, we will see smaller and energy-saving cars, says George Pettersson. I believe the Chinese car industry in both the short and long run will focus on the American car market rather than on the Swedish. Eventually Japanese and, above all, Korean cars will be squeezed out of the Swedish market by the Chinese expansion, says George Pettersson.
This years’ global KPMG survey shows that quality and fuel efficiency are the most important factors for car buyers ahead. 86% and 83% respectively of the interviewed directors, rank these two factors as “very important” for customers in the next five years. Other important purchase criteria when buying a car are security (70%) and cost (69%). In addition, the interviewed directors say that customers to a larger extent will ask for fuel efficiency, which is a factor that has increased since last years’ survey (from 53% to 65%).
”SUVs are out” - An increased focus on the climate in general and tougher environmental restrictions from authorities will change the marketing conditions for car manufacturers, says George Pettersson. Trendy cars from the beginning of the century, for example SUVs, will probably be completely out in 2010, he says.
New requirements from customers and authorities will lead to changes in the product mix of the car industry. Four out of five (81%) of the car industry directors expect an increase in sales of inexpensive cars as well as hybrid cars in the next five years. Sales of SUVs and big pickup trucks are expected to decrease.
- Sales of environmental cars will probably increase substantially in 2008, in spite of low total sales compared to global car sales. Sweden is already a leading country in adjusting to environmental cars and we hope this will benefit the Swedish car industry, says George Pettersson.
More facts from the KPMG survey:Despite an expected shift towards alternative fuel cars and hybrid cars, the directors in the KPMG survey expect a relatively slow market growth in these segments. In 2007, approximately 500,000-600,000 cars of this type were sold. Barely a third (32%) of the managers in this years’ survey believe in sales at the same level as 2007 or a slight decrease in 2008. At the same time, 25% believe in a modest increase between 600,000 and 700,000 cars and 16% on an increase to between 700,000 and 800,000 cars. 27% of the directors believe in a sales increase of more than 800,000 cars. To be noted from last year’s survey is that actual sales of environmental cars in 2007 were well over expectations. Only 17 % of the managers in last year’s survey believed in sales over 500,000 during 2007.
In the KPMG Global Auto Executive Survey, 113 car industry directors were interviewed as well as their suppliers from Australia, England, France, India, Japan, Canada, China, Sweden, South Korea, Germany and the US. The survey has been carried out since 1999. The results from this year’s survey shows that 26% of the managers believe that the car industry’s global profit will increase in the next five years, while 14% believe the profit will decrease.
A majority of those asked in this year’s survey (54%) believe that North American car manufacturers’ market share will decrease during the next five years, while 22% believe it will increase. Just over a third (38%) believes that European car manufacturers will increase their market share and a majority (78%) believes that Chinese car manufacturers will also increase their market share.
The future cost cuts are expected to be derived from innovations in manufacturing and technology (according to 67% of those asked), from manufacturing in low-cost countries (65%) and innovations in production material (57%) according to this year’s survey.