KPMG's Global Automotive Executives Survey 2020 has been published. According to the Covid-19 effect, focusing on the changes in the automotive sector, the global single market understanding is lagging behind in the sector, and the approach to maintain regional and local markets stands out. Automotive executives say that an era that requires international cooperation on issues such as balancing the supply chain, controlling global demand decline, and managing digital demand has begun.
KPMG's research this year with more than 30 CEOs and executives from 100 countries and more than two thousand consumer interviews sheds light on the complex effects of the Covid-19 crisis on the automotive industry. The research explains how the globalization, which has been regressed with the effect of the pandemic, is reflected in the sector. According to industry executives, in KPMG's Global Automotive Executives Survey 2020, the impact of Covid-19 is gathered under eight main headings:
- It should be accepted that Covid-19 is a global wave movement that should be evaluated from a global production and sales perspective.
- Business models that can follow the delays in the supply chain are a very important need.
- The Covid-19 crisis has caused significant demand changes that point to a profound recession. It is not right to be deceived by falling sales and shrink the sales team. On the contrary, it is necessary to focus on the management of existing human resources and customer relations and digital demands.
- People will move further away from public transport in the upcoming period and will risk spending more money to feel safe.
- Companies with strong liquidity can take advantage of this period with new collaborations, mergers and acquisitions. This crisis will allow such companies to redefine themselves in the market.
- It is imperative to see the distinction between cultures. For example, there is a spending culture in China and the USA. Germany and Japan are not willing to spend.
- The wide-ranging implementation of e-mobility will depend heavily on government support. Unsupported e-mobility will only be implemented in major cities and certain regions.
- Competition is being redefined. In other words, a period that requires global cooperation and cooperation on issues such as keeping the supply chain in balance, accepting global demand decline, and digital demand management is beginning.
According to the research, the megatrends in the sector as of the second half of 2020 are listed as follows:
- 98 percent of managers see sustainability as the key to making a difference, but only 17 percent of consumers.
- Community thinking about sustainability in the automotive industry has not yet been formed. This is because the classification criteria for whether a product in the automotive industry is sustainable are not yet clear and they are not transparent enough to influence their decisions for consumers.
- With the effect of Covid-19, consumers are making more cost-oriented choices in this period, their priorities have moved away from sustainability.
- 83 percent of executives feel that industry policies and regulators drive their technology agenda. Tax reductions and state aids will be important factors.
- With the effect of Covid-19, a period of difficulties in exports is forcing companies. For example, increased state aid for electric vehicles in China this year seems to provide flexibility in China's industrial policy.
- 73 percent of the administrators think that the mineral resources of a country directly affect the production technologies preferred by that country.
- Raw materials play a very important role in creating a regional difference in the automotive industry of the future. The raw material will prevent it from becoming a single global dominant player in the industry in the long run.
- Multiple localized shifts to different technologies, markets and applications are expected rather than a single, major regional shift.
- Companies in the automotive industry should produce independent and regional strategies for consumers.
- Focused on technological development, the automotive sector has shifted its focus to 'survival' and operation due to Covid-19.
- As Covid-19 negatively affects production, cost reductions and increased mergers and acquisitions are expected.
Studies evaluating the Automotive Sector Leader, KPMG Turkey Hakan Ölekl, said the industry is taking to change my ways and starts to turn. Ölekli said, “The impact of Covid-19 on the automotive industry is multifaceted. The fundamental change in demand needs to be evaluated together with the redefinition of the supply chain. As the sector spreads in waves of recession due to the pandemic, the reaction to regional decreases in demand and production will be part of the 'new normal' for automotive companies. The change in the understanding of competition and cooperation solutions is another important topic that comes out of the research. A rapprochement between automotive manufacturers and information and technology companies seems inevitable. However, automotive executives acknowledge the competition between them this year. Indeed, the market value of the top 15 technology companies is five times higher than the market value of the top 50 traditional automotive equipment manufacturers and suppliers ”.
Stating that software-oriented developments in vehicles take the first place in the retail of the future, Ölekli emphasized that more than 60 percent of automotive managers think that the number of physical retail centers will decrease by 20 to 30 percent on a global scale.