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1© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Global Economic and Automotive Trends & Developments
Presented by:Gavin Maile
South African Automotive Week15 October 2014
2© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Global Economic and Automotive Trends & DevelopmentsAgenda
2. Global Automotive Trends & Developments
3. KPMG Global Automotive Executive Survey 2014
1. Global, African & South African Economy
. 3.
© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Some news headlines about the global economy
Global
economy may
need stimulus –
Business D
ay
Global
economy
getting
better,
Barclays says
Global economy one shock away from another crisis – The Telegraph
Is world economy heading for another economic crisis? – The Daily Star
Two charts that show the
world’s economy is thriving –
Business Spectator
Outlook
for
global
econom
y remains
uneven
- IMF
Manufacturing spearheads stronger global growth – Saxo Bank
. 4.
© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Global outlook: main messages from the GEP (Worldbank)
High income country recovery is underway
Developing country growth to pickup slowly, as tailwinds from stronger high-income growth are countered by capacity constraints and an eventual tightening of financial conditions
Regional prospects vary
Global risks have declined but prospects remain sensitive to volatility in financial markets
Over the medium-term macroeconomic policy needs to tighten in order to increase resilience and, in some countries, alleviate inflationary pressures
Medium-term growth will have to come from structural reforms that boost growth potential
“Shifting priorities, building for the future”
. 5.
© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Global economy: GDP growth forecasts (Worldbank)
2012 2013 2014 2015 2016
2.5 2.42.8
3.4 3.5
World
2012 2013 2014 2015 2016
4.8 4.8 4.8
5.45.5
Developing countries
2012 2013 2014 2015 2016
1.51.3
1.9
2.4 2.5
High income countries
3.4% 5.4% 2.4%Growth outlook revised downwards from 3.8% at the beginning of the year to a more modest 3.4% in July. The recovery is continuing, but momentum has slowed down and there are risks that might derail the move towards a healthier economy.
Growth outlook revised upwards from 4.8% at the beginning of the year to a more aggressive 5.4% in July. Capacity constraints, slower local reforms and political tensions in some areas are, however, potential risks to the future growth outlook.
Growth outlook revised upwards from 1.9% at the beginning of the year to 2.4% in July. Mixed signals and uneven recovery of developed economies, with patches of very exciting growth and patches of bad news.
. 6.
© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The global powerhouses (World Bank)
TOP 10G L O B A L E C O N O M I C S U P E R P O W E R S
United States Projected GDP 2014: 17.5 trillion
Projected GDP 2019: 22.1 trillion
ChinaProjected GDP 2014: 9.1 trillion
Projected GDP 2019: 14.8 trillion
FranceProjected GDP 2014: 2.7 trillionProjected GDP 2019: 3.6 trillion
JapanProjected GDP 2014: 4.9 trillionProjected GDP 2019: 5.7 trillion
GermanyProjected GDP 2014: 3.6 trillionProjected GDP 2019: 4.9 trillion
Brazil
Projected GDP 2014: 2.2 trillionProjected GDP 2019: 2.9 trillion
Russia
Projected GDP 2014: 2.1 trillionProjected GDP 2019: 2.5 trillion
Italy
Projected GDP 2014: 2.1 trillionProjected GDP 2019: 2.6 trillion
India
Projected GDP 2014: 1.8 trillionProjected GDP 2019: 3.1 trillion
#1
#2
#5
#3
#4 #7
Source: World Bank
#8 #9 #10
#1
#10
#2
#5
#3
#8
#7
#4
#9
#6
UnitedKingdom
Projected GDP 2014: 2.5 trillionProjected GDP 2019: 3.7 trillion
#6
. 7.
© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
How healthy is Africa? (Economist Intelligence Unit)
Forecast average annual GDP growth 2014 - 20198.1%
Mozambique
7%
India
7.0%
AngolaTanzania Cote D’lvoire
Ghana
6.95%6.9% 6.4%
Nigeria Kenya
6.1% 6.0%
Ethiopia RussiaSouth Africa
USAUnited Kingdom
FranceGermany
5.1%2.65% 2.65%
2.5% 1.9% 1.5% 1.45%
Cameroon
4.3%
Brazil
2.65%
Sub-Saharan Africa average annual GDP growth 2006 - 2013
4.7%
Kenya
6.8%
Tanzania
6.3%
Uganda
3.7%
South
Africa
7.9%
Sierra
Leonne
6.8%
Nigeria
9.5%
Angola
6.2%
Botswana
6.5%
Zambia
7.7%
Ghana
10.6%
Ethiopia
7.1%
China
7.2%
Mozam-
bique
Forecasted growth for 2014: 1.5%
Q2 2014: +0.6% (lower than expected +0.9%)
. 8.
© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
South Africa: a story of confidence (or a lack thereof) (BER)
Neutral at 50
Sept 2009
Sept 2014
BER’s BCI survey
The BCI survey question: Respondents are asked to rate current business conditions as "satisfactory" or "unsatisfactory".
Respondents rated business conditions as unsatisfactory as the index is below 50.
However, it has increased by five points to 46 in 2014Q3.
This implies that close to 54% of respondents continued to be unhappy with prevailing business conditions.
The SACCI Business Confidence Index (BCI)
The BCI survey question: Respondents are asked to rate current business conditions as "satisfactory" or "unsatisfactory".
The index increased slightly to 89.2 in September from 89.0 in August 2014.
Although it appears that waning business confidence has been checked, business confidence remains at an undesirably low level
48
Sentiment among new vehicle dealers 15 points in the third quarter
Confidence among wholesalers by 15 index points.
Retailers, building contractors and manufacturers, the business mood by 11, 8 and 3 points respectively
23
28
43
36
47
44
55
48
39 38
52
41
47 46
52
48
42 4341 41
46
. 9.
© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
South Africa: a story of confidence (or a lack thereof) (BER)
1
6
1514
1514
9
11
45 5
-3
-1
-3
-7
1
-8-7
-6
4
-1
BER’s CCI survey questions
How do you expect the general economic position in South Africa to develop during the next 12 months? Improve considerably Improve slightly Deteriorate slightly Deteriorate considerably Don’t know
1
How do you expect the financial position in your household to develop in the next 12 months? Improve considerably Improve slightly Deteriorate slightly Deteriorate considerably Don’t know
2
What is your opinion of the suitability of the present time for the purchase of domestic appliances such as furniture, washing machines, refrigerators etc? Do you think that for people in general it is the right time, neither a good nor a bad time or the wrong time?
3
Consumer rating slipped from +4 to -1 index points during 2014Q3
Neutral at 0
Sept 2009
Sept
2014
The confidence levels of high income consumers remain notably higher compared to that of low income consumers, with wealthy consumers
being particularly optimistic about the outlook for their householdfinances.
. 10.
© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
South Africa’s standing amongst developing economies (Economist Intelligence Unit)
2001
2012
2017
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
US$ 3.3 bn
US$ 13 bn
US$ 20 bn
South Africa Russia Brazil India China
BRICS will represent 32% of global
economic output by 2017
In 2010, South Africa joined an expanded
BRICS group
Jim O’Neill of Goldman Sachs
created and coined the term BRIC to
identify the world’s fastest growing
economies
ECONOMIC POWER (2012)
MARKET SIZE
Total GDP of US$ 22.3 billionRepresenting 27% of total global economyPopulation about 40% of global population
Source: Economic intelligence Unit
In 2009, the first BRIC summit was held
5th BRICS summit in Durban, BRICS bank and BRICS business
council14.2%
13.3%
11.9%
58.4%
2.2%
Brazil
Russsia
India
China
SA
. 11.
© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
South Africa’s competitiveness (Global Competitiveness Report)
Institutions
36Infrastructure
60Economy
89
This little island is
beating us
Health and education
132
Higher education
86
Labour market
113
Financial markets
7
Innovation
43
Overall ranking 56Restrictive labour regulations
Inadequately educated workforce
Inefficient government bureaucracy
12© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Global Economic and Automotive Trends & DevelopmentsAgenda
2. Global Automotive Trends & Developments
1. Global, African & South African Economy
3. KPMG Global Automotive Executive Survey 2014
13© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
KPMG’s view on impending changes in automotive value chain
ORIGINAL EQUIPMENTMANUFACTURER
SUPPLIER
CAR RENTAL ANDFLEET PROVIDER
CONVENTIONAL DEALER
FINANCIAL SERVICE PROVIDER
MOBILITY SERVICE PROVIDERTIER '0.5'
NEWCOMER OEMs
NEW COMPONENTS SUPPLIER
IS AND CONNECTIVITY
WEB 2.0 BROKER
14© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
KPMG’s view on impending changes in automotive value chain
NEWPLAYERS
TRADITIONAL PLAYERS
Tier 1 Suppliers■ Vehicle and engine module / system
manufacturing
Tier 2 Suppliers■ Automotive parts manufacturing
(suspension, steering and driveline)
Tier 3 Suppliers■ Automotive parts manufacturing and
raw material processing
Electric Components and Light Weight Materials Suppliers■ Batteries, e-motors, power electronics
and semi-conducters
■ Carbon-fiber chassis and auto parts
Information Systems and Connectivity Companies■ Telematics, wireless communication,
infotainment, and mobile payment
AUTOMOTIVE VALUE CHAIN
SUPPLIER
NEW COMPONENTS SUPPLIER
IS AND CONNECTIVITY
15© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Region Safety Innovation Quality Emerging Markets
Consolidation Sustainability CollaborationRationalizing Capacity and Production
Leveraging Cost Benefit
Profitability Expansion Growth Aftermarket
Western Europe
US
Japan
Brazil
Russia
India
China
RoW
Outside-car Components
In-car Components
New e-components
Suppliers – Market Segmentation
Supplier Market Segments Key Electric Components
Charger Li-ion BatteryPack
Inverter+DC/DC
+ EV Control
Electric MotorCharging
Station
KEY TRENDS
AUTOMOTIVE
VALUE CHAIN
ORIGINAL EQUIPMENTMANUFACTURER
SUPPLIERCAR RENTAL &
FLEET PROVIDER
CONVENTIONAL DEALER
FINANCIAL SERVICE PROVIDER
MOBILITY SERVICE PROVIDERTIER ‚0.5‘
NEWCOMER OEMs
NEW COMPONENTS SUPPLIER
IS & CONNECTIVITY
WEB 2.0 BROKER
notvery distinctive
16© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Key TrendPriority
Comment
QualityPotential EV buyers are concerned about the driving range of EVs. OEMs are trying to find various methods, such as using towed generator system or providing training to drivers, to increase distance on a single charge.
Safety and Reliability
High temperatures shorten the life of lithium-ion batteries, while cold temperatures diminish their power capabilities and affect overall vehicle performance.
CostHigh cost of EVs will discourage potential buyers. Also, the cost of charging infrastructure and batteries will affect the industry.
InfrastructureDeveloped markets such as Western Europe and the US have started formulating policies to expand public charging infrastructure. However, it is still very immature in other regions.
Government Intervention
Governments have taken initiatives to encourage the EV industry by providing tax breaks on purchase and investments in R&D. However, with no clear guidelines, there could be a delay in the rollout of EVs.
New Components – Electric Components
B
OEM Strategies to Access Battery and E-Component Know-How
AUTOMOTIVE
VALUE CHAIN
ORIGINAL EQUIPMENTMANUFACTURER
SUPPLIERCAR RENTAL &
FLEET PROVIDER
CONVENTIONAL DEALER
FINANCIAL SERVICE PROVIDER
MOBILITY SERVICE PROVIDERTIER ‚0.5‘
NEWCOMER OEMs
NEW COMPONENTS SUPPLIER
IS & CONNECTIVITY
WEB 2.0 BROKER
■ With three fully owned battery plants already operating in Europe, the Renault-Nissan Alliance tries to keep the battery production for their EVs in-house.
■ Newcomer OEMs such as BYD and Tesla Motors produce e-components in-house.
Make
■ BMW and Fiat-Chrysler buy battery technology from the South Korean battery specialist SB LiMotive instead of engaging themselves in the development and manufacturing of battery cells and packs.
Buy
■ Daimler operates two JVs with Evonik for battery packs and cells — Deutsche Akkumotive and LiTec Battery.
■ Daimler recently announced plans to form a JV with Bosch, to produce e-motors.
■ VW jointly develops lithium-ion batteries with Sanyo/Toshiba.
Cooperate Company Country Customers / Partners
Panasonic Japan Toyota
LG Chem Korea GM
BYD Co. Ltd.` China BYD
Samsung SDI Co., Ltd.
Korea Telsa Motors, VW
GS Yuasa JapanMitsubishi (i-MiEV), PSA (Peugeot iOn, Citroen C-Zero)
Saft Groupe France Johnson Controls, GM
Tesla Motors US Daimler (Smart EV), Toyota
China BAK Bat. China GM, FAW Group
notvery distinctive
Importance of Key Trends for Electric Components Suppliers
Top (Vehicle) Battery Manufacturers 2012
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17© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
New Components – Light Weight Materials
B
Carbon Fiber as Future Light Weight Material in Automotive
OEM Strategies to Access Battery & E-component Know How Selected Light Weight Materials Suppliers 2012
AUTOMOTIVE
VALUE CHAIN
ORIGINAL EQUIPMENTMANUFACTURER
SUPPLIERCAR RENTAL &
FLEET PROVIDER
CONVENTIONAL DEALER
FINANCIAL SERVICE PROVIDER
MOBILITY SERVICE PROVIDERTIER ‚0.5‘
NEWCOMER OEMs
NEW COMPONENTS SUPPLIER
IS & CONNECTIVITY
WEB 2.0 BROKER
+ Car weight reduction in favor of heavy but necessary auto parts (e.g. lithium-ion battery packs)
+ Increased fuel efficiency through lighter weight
+ Reduced exhaust emissions via higher fuel efficiency
+ Improved passive and active safety owing to higher material strength than aluminum or steel
Advantages
- Very high material costs (CFP component can cost nearly five times more than the same part made from aluminum)
- Very time-consuming manufacturing cycle (e.g. hand-positioning layers of fiber, lengthy bonding process)
- In contrast to aluminum or steel, no post-processing applicable (scrap can be around 30 percent)
Disadvantages
Importance of Key Trends for Light Weight Materials Suppliers
Company Country Customers / Partners
Mitsubishi Chemical Holding
Japan N/A
Toray Industries Japan Daimler AG (JV)
Voith Germany Audi
Teijin Japan N/A
SGL Carbon GermanyBMW (JV), VW (minority stake), PSA
Zoltek Companies United States N/A
Oya Carbon Co., Ltd. (Oya Co)
China N/A
■ Carbon fiber is strong, stiff and light and therefore well fit for automotive structural parts.
■ For example, BWM’s ‘project i’ under the project, environment-friendly models are developed and launched in mass leveraging carbon fiber also thinking beyond environmentally-conscious and agile driving. Sales Price: > US$55,000
Release Date: 2013
Range: ~ 100 miles
Weight Reduction: > 400 lbs
notvery distinctive
Key Trend Priority Comment
SafetyContrary to popular belief, carbon fiber is stiffer and five times stronger than steel. In addition, it has a higher energy-absorption rate than steel and can increase safety in a collision.
Cost
Companies are innovating new techniques to reduce the cost of carbon fiber, such as use of ‘forged composites’ manufacturing process by Lamborghini and Callaway Golf Co, and mass production of a mold for an automobile frame by Teijin Limited.
Fuel efficiency
With tough fuel economy mandates set by developed countries, many OEMs (such as GM) are planning to use carbon fiber.
InnovationCompanies are developing new innovative methods to improve the quality of the carbon fiber and reduce production time for mass usage.
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18© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
IS and Connectivity – Overview
■ Tier 1 supplier Delphi and Autonet Mobile, a provider of internet-connectivity telematics, signed an agreement to develop and market a wireless connectivity platform, to deliver entertainment and downloadable content to vehicles in motion.
■ Hyundai and Microsoft jointly set up an ‘Automotive IT Innovation Center’ to develop next generation infotainment systems, including multimedia and navigation-related features.
■ Ford and Microsoft have already joined forces to equip Ford cars with a voice-controlled communications and entertainment system. Recently, they expanded their partnership to introduce an electricity grid management tool to Ford’s new electric models, which helps consumers to time car charging to periods when energy use is lower and therefore cheaper.
■ Bosch Group and Vodafone integrated their machine-to-machine (M2M) platforms, to offer businesses a simple way of wirelessly connecting products to the internet.
Trends toward Connected Cars Possible application areas of connectivity-based technologies
Leveraging convergences via cross-sector partnerships
AUTOMOTIVE
VALUE CHAIN
ORIGINAL EQUIPMENTMANUFACTURER
SUPPLIERCAR RENTAL &
FLEET PROVIDER
CONVENTIONAL DEALER
FINANCIAL SERVICE PROVIDER
MOBILITY SERVICE PROVIDERTIER ‚0.5‘
NEWCOMER OEMs
NEW COMPONENTS SUPPLIER
IS & CONNECTIVITY
WEB 2.0 BROKER
■ Modern cars are increasingly turning into smart and web-connected ‘mobile platforms.’
■ OEMs try to integrate the trends in consumer electronics, in order to generate a new ecosystem of revenue as others may run dry in the future.
■ Importance of mechanical parts for future automotive value creation is decreasing. 2010
2025Software
Electronical parts
Mechanical parts
Shift in value creation in the Automotive Business
Infomobility■ GPS navigations providing drivers
info (news, available parking, alternative routes, shops, tourist areas, traffic situation, CO2 route optimization, points of interest, etc)
Commerce■ Mobile payments system (charging tolls,
parking fees, buying tickets, shopping)
■ Usage of the car recording system (miles per year, day of the week …) to be correlated with premiums for car insurance (e.g., every week, the car dashboard signals the cost of car insurance)
Entertainment■ Consumer electronics
for passenger amusement in front and rear seats (e.g., iPod, satellite radio, TV and car PC system)
Communication■ Telephone video
call, email, SMS, internet access to connect to remote users.
Safety / Security■ In-vehicle tracking system (intelligent black box
checking and tracking car conditions)
■ Personalization of car access and driver settings
■ Automatic security distance maintaining system (based on speed and weather conditions)
■ Home video alarm monitored from the carCar maintenance and Optimization■ Remote diagnostic
application
■ Chips and controller for variable speed drive intelligence in order to produce Smart Motors that reduce energy consumption and CO2 emissions
■ Telemetry to collect vast amount of data to fine tune car performance monitoring
“You get more and more connectivity between cars as well as between manufacturer and driver.” – Eberhard H. Kern, Mercedes Benz India,
June 2013Source: Press Release
Source: Reuters
19© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
KPMG’s view on impending changes in automotive value chain
NEWPLAYERS
TRADITIONAL PLAYERS
Original Equipment Manufacturers■ Vehicle and engine design,
manufacturing, and assembly
■ Brand management
■ Several OEMs vertically integrate e-car value chain steps, from battery manufacturing to e-motor production
■ Supplier, dealer and customer financing via captive financial service arms
Tier ‘0.5’ Suppliers■ Tier 1 suppliers upgrade to contract
manufacturers
■ Complete car design and development capabilities, including production
Newcomer OEMs■ Immature e-technologies and relatively
low complexity allow newcomers to compete with established players
AUTOMOTIVE VALUE CHAIN
ORIGINAL EQUIPMENTMANUFACTURER
TIER '0.5'NEWCOMER
OEMsNEW COMPONENTS
SUPPLIERIS AND
CONNECTIVITY
20© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
OEMs – Global Market Segmentation
Light Vehicles (LV) ■ Light Vehicles includes both passenger vehicles and light
commercial vehicles with at least four wheels, used for the transport of passengers and/or used for the carriage of goods.
Passenger Vehicles (PV) ■ Motor vehicles with at least four wheels, used for the transport of
passengers, and comprising no more than eight seats, in addition to the driver's seat.
Light commercial vehicles (LCV) ■ Motor vehicles with at least four wheels, used for the carriage of
goods. This limit depends on national and professional definitions and varies between 3.5 tons and 7 tons.
Definitions of Vehicle Types LV Sales Development by Market Cluster* 2010-17e
AUTOMOTIVE
VALUE CHAIN
ORIGINAL EQUIPMENTMANUFACTURER
SUPPLIERCAR RENTAL &
FLEET PROVIDER
CONVENTIONAL DEALER
FINANCIAL SERVICE PROVIDER
MOBILITY SERVICE PROVIDERTIER ‚0.5‘
NEWCOMER OEMs
NEW COMPONENTS SUPPLIER
IS & CONNECTIVITY
WEB 2.0 BROKER
2010 2011 2012 2013 2014 2015 2016 20170
2
4
6
8
10
12
14
16
1.5 1.6 1.4 1.3 1.3 1.5 1.6 1.7
6.7 6.6 6.7 6.7 7.3 8.0 8.8 9.6
2.8 2.9 3.4 3.3 3.23.4
3.63.7
TRIAD BRIC RoW
LC
V S
ale
s (
Mill
ion
Un
its
)
PV Sales Development by Market Cluster 2010-17e LCV Sales Development by Market Cluster 2010-17e
2010 2011 2012 2013 2014 2015 2016 20170
20
40
60
80
100
120
29 30 31 31 32 33 34 36
25 27 29 31 34 38 42 45 20 20 22 21 21
22 23
24
TRIAD BRIC RoW
LV
Sa
les
(M
illio
n U
nit
s)
2010 2011 2012 2013 2014 2015 2016 20170
10
20
30
40
50
60
70
80
13.4 13.2 12.1 11.7 11.9 12.3 13.0 13.8
18.4 20.4 22.3 23.9 26.6 29.9 32.8 35.0
16.7 16.8 18.1 17.9 17.818.5
19.320.0
TRIAD BRIC RoW
PV
Sa
les
(M
illio
n U
nit
s)
48.6 50.4 52.5 53.5 56.460.7
65.068.8
11.1 11.1 11.5 11.4 11.912.9
14.015.1
74 77 81 8387
9399
104
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LM
C A
uto
mot
ive
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2012
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es,
KP
MG
ana
lysi
s
*Note: Vehicles unidentified are included in LV sales, however excluded from PV and LCV sales.
Sou
rce:
LM
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uto
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ive
Q3
2013
21© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
OEMs – Key TrendsAUTOMOTIVE
VALUE CHAIN
ORIGINAL EQUIPMENTMANUFACTURER
SUPPLIERCAR RENTAL &
FLEET PROVIDER
CONVENTIONAL DEALER
FINANCIAL SERVICE PROVIDER
MOBILITY SERVICE PROVIDERTIER ‚0.5‘
NEWCOMER OEMs
NEW COMPONENTS SUPPLIER
IS & CONNECTIVITY
WEB 2.0 BROKER
notvery distinctive
RegionMobility
SolutionsOvercapacity
Supplier Performance
Urbanisation Connected CarFuel
Efficiency/e-mobility
Market Growth
Consolidation JV’s/M&A
Western Europe
US
Japan
Brazil
Russia
India
China
KEY TRENDS
22© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Tier ‘0.5’ – Overview
■ Trend is shifting toward greater reliance of automotive OEMs on tier 1 contractors for development and supply of critical components or even completely outsourced model lines.
■ Over the past 15 years, more OEMs have undertaken contract manufacturing, as they have come under increasing pressure to develop new vehicles, particularly due to consumer preference for more distinctive models and in response to uncertainties in market conditions .
■ Tier ‘0.5’ suppliers are those suppliers who, besides providing modules for vehicles, have complete vehicle design and development capabilities, including vehicle production (contract manufacturing), such as Magna International, Valmet Automotive, Karmann and Pininfarina.
■ Porsche has been outsourcing its 987 Boxster and Cayman manufacturing to Finland-based contract manufacturer Valmet Automotive since 1997. As this contract will end in 2011, Magna Steyr will step in to produce Boxster / Cayman sports cars in Austria, as of 2012.
■ California electric car start-up Fisker Automotive has also contracted Valmet Automotive to assemble its Karma plug-in hybrid sports sedan in Finland.
■ Electric vehicle ‘Eva,’ developed in-house at Valmet Automotive, demonstrates that contract manufacturers are striving for independent vehicle development, engineering and manufacturing.
■ Pininfarina, a leader in the production of niche vehicles, produces for Alpha Romeo (Spider), Ferrari (458 Italia) and Maserati (GranCabrio).
Shifting Responsibilities in Automotive Value Chain Prominent Examples of Contract Manufacturing
Suppliers Move up Automotive Value Chain
AUTOMOTIVE
VALUE CHAIN
ORIGINAL EQUIPMENTMANUFACTURER
SUPPLIERCAR RENTAL &
FLEET PROVIDER
CONVENTIONAL DEALER
FINANCIAL SERVICE PROVIDER
MOBILITY SERVICE PROVIDERTIER ‚0.5‘
NEWCOMER OEMs
NEW COMPONENTS SUPPLIER
IS & CONNECTIVITY
WEB 2.0 BROKER
49%
39%
12%
Yes No Don't know
2010 OEM
2015+ OEMTier ‘0.5’Tier
3Tier
2Tier
1
Tier1
Tier2
Tier3
Process or cost leadership
(supplies parts and raw materials)
Technology leadership
(supplies sub-systems and
modules)
Integration competence
(supplies complex and
critical vehicle systems
Vehicle integration competence (capable
of assembling and manufacturing entire
vehicle)
Vehicle integration competence
(capable of assembling and
manufacturing entire vehicle)“49 percent of 200 leading
automotive executives believe that the future automotive value chain responsibilities will change significantly.”
Source: KPMG‘s Global Automotive Executive Survey 2011
23© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Newcomer OEMs – Overview
Technological Changes Open up Promising Opportunities for Newcomers
AUTOMOTIVE
VALUE CHAIN
ORIGINAL EQUIPMENTMANUFACTURER
SUPPLIERCAR RENTAL &
FLEET PROVIDER
CONVENTIONAL DEALER
FINANCIAL SERVICE PROVIDER
MOBILITY SERVICE PROVIDERTIER ‚0.5‘
NEWCOMER OEMs
NEW COMPONENTS SUPPLIER
IS & CONNECTIVITY
WEB 2.0 BROKER
■ Combustion engine parts, including the engine block, pistons, gaskets, valves, camshaft, oil pump, oil filter and injection systems
■ Exhaust system■ Tank system■ Clutch■ Peripheral systems such as oil pumps,
turbochargers and alternators
What will disappear?
■ Electric engine and related powertrain systems■ Battery systems, including power electronics,
battery management, charging devices (Plug-in) and DC / AC converter
■ Gearbox■ Wheel suspension■ Power transmission■ Air condition systems■ Cooling water pump■ Thermal insulation■ Chassis
What will change? What will be added?
Reduction in Complexity
■ Less complexity could mean that supplier fragmentation will decrease (less need for a high number of specialists). This could increase profit margins overall.
Electrical engine: Powertrain with ca. 210 individual parts and 14 mechanical partsCombustion engine (six cylinders): Powertrain
with ca. 1,400 individual parts and 140 mechanical parts
■ Mature technology with high entry barriers■ Newcomers must close experience gaps
■ With a young technology, all market participants start at the same level, and face similar challenges.
■ Newcomers have the same or better chances to succeed.
24© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Newcomer OEMs – Current Examples
■ SABA Motors is a Silicon Valley Startup company developing high performance electric vehicles similar to Telsa Motor’s electric sports car.
■ The company promises to offer two-seat electric roadster that accelerates to 60 mph in five seconds and reaches a top speed of 105 mph
■ The car offers driving range between120 and 140 miles per charge.
■ BYD is a 15-year-old Hong Kong-listed battery maker that started producing BYD-branded electric cars, using its own batteries.
■ MidAmerican Energy, a unit of billionaire investor Warren Buffett's Berkshire Hathaway, surprised financial markets in 2008, with an agreement to purchase 10 percent of since then little-known BYD for USD 230 million.
■ BYD is working on launching its first plug-in all electric car, the E6, however, the time-frame is unknown.
Tesla Motors (Premium Electric Sports Cars) SABA (Electric Sports Car)
BYD (Build Your Dreams)
AUTOMOTIVE
VALUE CHAIN
ORIGINAL EQUIPMENTMANUFACTURER
SUPPLIERCAR RENTAL &
FLEET PROVIDER
CONVENTIONAL DEALER
FINANCIAL SERVICE PROVIDER
MOBILITY SERVICE PROVIDERTIER ‚0.5‘
NEWCOMER OEMs
NEW COMPONENTS SUPPLIER
IS & CONNECTIVITY
WEB 2.0 BROKER
Source: CNBC
■ Tesla Motors produces a high-performance electric sports car, and is backed by a number of high-profile investors.
■ In May 2012, introduced all new model S with improved efficiency and range.
■ In Dec 2012, reported an annual sale of US$385.7 million, an increase from US$148.6 million for the year ended Dec 2011.
■ In October 2013, announced the opening of the West Coast Supercharger Corridor, energizing a network of stations that enable Model S owners to travel for free between San Diego, California and Vancouver, British Columbia.
■ In October 2013, announced alliance with Panasonic to expand supply of automotive-grade battery cells. Source: CNBC
Source: CNBC
■ Formed as a spin out from Rough and Tuff Electric Vehicles, headquartered in Atlanta, Georgia produced smart car called ‘The Life’ lookalike of electric car.
■ The Life is a two-seater car priced at US$32,995, with driving range of 100 miles.
■ The car is small in size reaching 65 mph top speed and is relatively highly priced compared to similar cars
Wheego Electric – The Life
Source: Company website
25© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
KPMG’s view on impending changes in automotive value chain
NEWPLAYERS
TRADITIONAL PLAYERS
Captive / independent dealerships■ Showroom-bound vehicle marketing and
sales
■ Vehicle maintenance services
Auto Rental and (Non-)Captive Financial Services Companies■ Long-/short-term auto rental services
■ Leasing, financing and fleet management
Mobility Service Providers
■ Intra-urban car sharing / club schemes or intermodal mobility solutions
■ Can be provided by OEMs, car-rentals, utilities, infrastructure providers, public transport companies or new entrants
Web 2.0 Brokers / Intermediaries■ Vehicle brokerage via online distribution
channels
AUTOMOTIVE VALUE CHAIN CAR RENTAL AND
FLEET PROVIDER
CONVENTIONAL DEALER
MOBILITY SERVICE PROVIDERNEW COMPONENTS SUPPLIER
IS AND CONNECTIVITY WEB 2.0 BROKER
26© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Conventional Dealers – Overview
Dealer Market Segmentation
AUTOMOTIVE
VALUE CHAIN
ORIGINAL EQUIPMENTMANUFACTURER
SUPPLIERCAR RENTAL &
FLEET PROVIDER
CONVENTIONAL DEALER
FINANCIAL SERVICE PROVIDER
MOBILITY SERVICE PROVIDERTIER ‚0.5‘
NEWCOMER OEMs
NEW COMPONENTS SUPPLIER
IS & CONNECTIVITY
WEB 2.0 BROKER
DealerGroups
Used Car
Dealerships
Multi-Brand
Dealerships
IndependentDealer
End Customer
OEM Captive
Dealerships
Key Trend Priority Comment
Emergence of Establishing Market
Establishing markets such as China will reach higher levels of market maturity quicker than existing established markets.
Customer Relationship Management (CRM)
Auto dealers are increasingly using CRM software or online solutions to manage / optimize their marketing activities, sales processes customer satisfaction and retention, and service department functions.
After-sales Support
After-sales support is one of the core focus areas for dealers, particularly in the Triad.
Used Car Business
Post the financial crisis, sales volume of used cars has been increasing and is expected to increase further in major markets.
Multibrand Dealers Dealers moving toward multibrand representation as single brand dealers are faced with profitability issues.
Key Trends at Global Level
27© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Conventional Dealers – Retail Market OverviewAUTOMOTIVE
VALUE CHAIN
ORIGINAL EQUIPMENTMANUFACTURER
SUPPLIERCAR RENTAL &
FLEET PROVIDER
CONVENTIONAL DEALER
FINANCIAL SERVICE PROVIDER
MOBILITY SERVICE PROVIDERTIER ‚0.5‘
NEWCOMER OEMs
NEW COMPONENTS SUPPLIER
IS & CONNECTIVITY
WEB 2.0 BROKER
Source: KPMG Global Automotive Retail Market Study
Country
Car Parc Size 2000 (millions)
Car Parc Size 2010(millions)
Car Parc Size 2020 (millions)
Car Ownership rate 2000 (in percent)
Car Ownership rate 2010 (in percent)
Car Ownership rate 2020 (in percent)
China 6 46 200 1 3 16
US 211 226 262 96 95 99
India 6 17 57 1 2 5
Brazil 14 22 38 11 17 22
Japan 52 58 59 50 57 61
Russia 20 34 53 17 28 46
Germany 44 42 45 63 62 69
UK 28 31 34 60 64 66
France 33 37 38 69 75 79
Italy 28 31 34 60 64 67
Matured market Establishing markets
New car sales are often stable or even declining in year-on-year and replacement car demand comfortably exceeds demand for first cars
New car sales growth rate over the last 10 years is often double digit and first car demand considerably exceed replacement-car demand
Used-to-New car sales ratio is between 1:1 and 3:1Used-to-New car sales ratio is often below 1:1, depending on the new car sales growth
Vehicle ownership rate is usually above 50percent
Vehicle ownership rate is usually below 50Percent
Over 90 percent of all vehicle purchases arefinanced
Most car buyers pay for their vehicles in cash
The total number of dealerships is constantlydecreasing, due to competition and low profits.
The number of dealerships is constantly rising to satisfy steadily increasing demand.
Key Difference – Mature and Establishing Retail Market
Car Parc Size and Density – Top 10 automotive market
28© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Mobility Service Providers – Overview
Growing Trend Toward Integrated Mobility Services / Solutions
Parameters for Mobility Concepts
AUTOMOTIVE
VALUE CHAIN
ORIGINAL EQUIPMENTMANUFACTURER
SUPPLIERCAR RENTAL &
FLEET PROVIDER
CONVENTIONAL DEALER
FINANCIAL SERVICE PROVIDER
MOBILITY SERVICE PROVIDERTIER ‚0.5‘
NEWCOMER OEMs
NEW COMPONENTS SUPPLIER
IS & CONNECTIVITY
WEB 2.0 BROKER
partially integrated mobility services
integratedmobility services
Comprehensivemobility solutions
Usage
Owner-ship
Car purchase + added value services (e.g.
insurance)
Vehicle financing or
leasing
Carsharing, car rental, full-
service-leasing
Intermodal mobility
services (car + pub. transport)
Finance & Insurance Telematics Mobility & Energy Technical Services
Vehicle financial services■ Credit■ Leasing■ Buy-back
Remote controls (EVs)■ Remote battery monitoring■ Remote control (HVAC, charging process, etc.)
Mobility■ Multimodal mobility access■ ICE car loan (“switching”) for EVs
Assistance■ Roadside assistance■ Localized assistance
Battery financial services (EVs)■ Credit■ Leasing■ Buy-back
Navigation■ Real-time traffic info■ Points of interest■ Eco-routing■ Reachable destinations
Energy / fuel■ Energy supply for Evs■ Fuel for ICEs
Warranty■ Warranty■ Warranty extension on EV and battery
Insurance■ Vehicle insurance■ Insurance on financing
Entertainment■ Connection to external devices■ Embedded apps (Internet, video, etc.)
Charging (EVs)■ Infrastructure installation■ Access to fast-charging networks
Maintenance■ Battery maintenance■ EV maintenance■ Battery replacement■ Remote maintenance
29© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Web 2.0 Brokers – Overview
■ More and better information is provided, such as vehicle reports by independent consumer associations and interest groups, direct product and service comparison.
■ A more comprehensive coverage of the market reduces the risk of customers overpaying. A web-based intermediary will immediately be able to tap a vast reservoir of potential buyers / sellers, and may thus realize substantial economies of scale in information provision.
■ It is easy to link with providers of value-added mobility services such as car insurance, finance, car pooling and maintenance centers.
■ The wealth of information on the web is complemented by traditional services; for example, some websites offer home delivery of new cars.
Emergence of Virtual Sales Channel
Advantages of Online Auto Brokerage for Customers
AUTOMOTIVE
VALUE CHAIN
ORIGINAL EQUIPMENTMANUFACTURER
SUPPLIERCAR RENTAL &
FLEET PROVIDER
CONVENTIONAL DEALER
FINANCIAL SERVICE PROVIDER
MOBILITY SERVICE PROVIDERTIER ‚0.5‘
NEWCOMER OEMs
NEW COMPONENTS SUPPLIER
IS & CONNECTIVITY
WEB 2.0 BROKER
WEB 2.0 Automotive Brokers
Automotive Information
Brokers
Automotive ServiceBrokers
Companies that offer online information, pricing and online quoting as well as additional services, such as financing, insurance, and a direct link to car dealers.
Companies that offer online information, pricing and a broker service to bring together potential buyers and sellers, but do not offer any additional services. They are purely infomediaries.
Source: Cybermediation in Auto Distribution: Channel Dynamics and Conflicts
30© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
KPMG’s view on impending changes in automotive value chainSummary
NEWPLAYERS
TRADITIONAL PLAYERS
Tier 1 Suppliers■ Vehicle and engine module / system
manufacturing
Tier 2 Suppliers■ Automotive parts manufacturing
(suspension, steering and driveline)
Tier 3 Suppliers■ Automotive parts manufacturing and
raw material processing
Electric Components and Light Weight Materials Suppliers■ Batteries, e-motors, power electronics
and semi-conducters
■ Carbon-fiber chassis and auto parts
Original Equipment Manufacturers■ Vehicle and engine design,
manufacturing, and assembly
■ Brand management
■ Several OEMs vertically integrate e-car value chain steps, from battery manufacturing to e-motor production
■ Supplier, dealer and customer financing via captive financial service arms
Tier ‘0.5’ Suppliers■ Tier 1 suppliers upgrade to contract
manufacturers
■ Complete car design and development capabilities, including production
Information Systems and Connectivity Companies■ Telematics, wireless communication,
infotainment, and mobile payment
Captive / independent dealerships■ Showroom-bound vehicle marketing and
sales
■ Vehicle maintenance services
Auto Rental and (Non-)Captive Financial Services Companies■ Long-/short-term auto rental services
■ Leasing, financing and fleet management
Mobility Service Providers
■ Intra-urban car sharing / club schemes or intermodal mobility solutions
■ Can be provided by OEMs, car-rentals, utilities, infrastructure providers, public transport companies or new entrants
Newcomer OEMs■ Immature e-technologies and relatively
low complexity allow newcomers to compete with established players
Web 2.0 Brokers / Intermediaries■ Vehicle brokerage via online distribution
channels
AUTOMOTIVE VALUE CHAIN
ORIGINAL EQUIPMENTMANUFACTURER
SUPPLIERCAR RENTAL ANDFLEET PROVIDER
CONVENTIONAL DEALER
FINANCIAL SERVICE PROVIDER
MOBILITY SERVICE PROVIDERTIER '0.5'
NEWCOMER OEMs
NEW COMPONENTS SUPPLIER
IS AND CONNECTIVITY WEB 2.0 BROKER
31© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Global Economic and Automotive trends & developmentsAgenda
2. Global Automotive trends & developments
1. Global, African & South African Economy
3. KPMG Global Automotive Executive Survey 2014
32© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
KPMG’s Global Automotive Executive Survey 2014About the study
Geographic distribution of respondents Respondents job titles
Company category Company annual revenues
About the study
■ KPMG International’s annual assessment of the current state and future prospects of the worldwide automotive industry.
■ In this year’s survey 200 senior executives from the world’s leading automotive companies were interviewed.
Source: KPMG's Global Automotive Executive Survey 2014.
33© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Key automotive trends up to 2025
Source: KPMG's Global Automotive Executive Survey 2014.
Note: Percentage of respondents that rated a trend as ‘extremely important’ or ‘very important’
85%78%
76%
69%
61%
49%
49%
14%
59%
59%57%
STANDARDIZATIONIncreasing use of platforms andstandardization of modules ICE OPTIMIZATION
Downsizing and optimization of theinternal combustion engine (ICE)
FUEL CELL E-MOBILITY
EUROPEAN PRODUCTIONRationalization of production inEurope and shifting of productionto emerging markets
BATTERY E-MOBILITY
FINANCE & LEASINGOEM captivefinancing and leasingURBAN VEHICLE
Innovative urban vehicledesign concepts
CONNECTIVITYConnected car technologies(e.g. car-to-x communication)
MOBILITYMobility-as-a-service
SELF-DRIVING CARS
EMERGING MARKETSMarket growth in emerging markets
The industry continues to be shaped by emerging markets.
There is a sharp decline in the importance of pure battery e-mobility as automakers continue to turn their attention to improving ICE efficiency.
34© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Markets and consumers - the bigger picture: Consumers choose economy over innovation
Percentage of respondents that rated issues as ‘extremely important’ or ‘very important’
Source: KPMG’s Global Automotive Executive Survey 2014.
92% 79% 79% 74% 73%
70% 69% 65% 53% 47%
Fuel efficiency Safety innovation Ergonomics andcomfort
Vehicle styling/exterior
Environmentalfriendliness
Enhanced vehiclelifespan
Plug-in solutions Vehicle-bound internetconnectivity and built-intechnologies
Telematics/personalassistance services
Use of alternative fuel technologies
Consumers have to choose between their conscience, their wallet and their status.
Connected car solutions are gaining importance year-on-year.
Factors influencing consumer’s purchase decision
35© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Evolving strategies for market success
Note: Percentage of respondents that rated the strategy as ‘extremely important’ or ‘very important’Source: KPMG’s Global Automotive Executive Survey 2014.
1 3 84%
77%
77%
76%
55%
50%
2
3
4
5
6
2
1
6
4
5
Ranking2013 Business strategy Percentage
Organic growth
Expansion of the value chain and diversification
Corporate partnerships (JVs and partnerships)
Cooperation with players from converging industries
Outsourcing of (non-)core activities
Mergers and acquisitions
Ranking2014
Automakers arerefocusing fromjoint venturesand partnershipstowards independentgrowth.
36© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Thank you
Presentation by:
Gavin Maile Director+27 83 253 7165gavin.maile@kpmg.co.za
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