Investment in new power train technologies such as hybrid and all electric remains a key priority for 93 percent of auto executives

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    • Over 90 percent of auto executives see investment in hybrid systems, battery electric power or hydrogen fuel-cell technologies as a key priority over the next five years.
    • Affordable electric cars will not be available to mass market until 2015 and their introduction will be supported by government subsidies.
    • Future of cars to be influenced by urban planning and environmental restrictions
    • The majority of respondents believe China to lead as the world’s largest car market and car buyer.

Growth in the UK car sector is to be driven by developing new products and technologies, according to a KPMG 2011 Global Automotive Executive Survey of over 200 global automakers.

Investment in new power train technologies such as hybrid and all electric remains a key priority for 93 percent of auto executives – Over seven in ten auto executives said they would enter into strategic alliances or joint ventures to fund the capital costs or to secure the necessary technology.

However, over half of the respondents believe the auto industry will not be able to offer an electric vehicle that is affordable as traditional fuel vehicles for mainstream buyers until after 2015 without government subsidies.

Mike Steventon, Automotive Partner at KPMG in the UK, said: “One factor is common worldwide: the need to continue to develop the technology that will produce efficient, affordable electric vehicles. Even though the industry is still in recovery mode, the pace of technical leadership intensifies. With the rise of oil costs and fears over future supplies, it’s no real surprise that fuel-efficiency is considered the single biggest factor for consumers when buying a vehicle. The challenge is whether in this period of fiscal belt tightening, governments can afford to subsidise the introduction of electric vehicles.”

Around 80 percent of respondents say that hybrid and electric vehicles will see the lion’s share of growth of any vehicle category over the next five years. Nonetheless, many respondents are expecting a continued support role from government, since they believe electric cars will not be affordable without subsidies anytime soon.

Over four in ten auto executives expect government subsidies to tail-off with only a quarter expecting it to increase but almost 40 percent of respondents think that the most effective way of making electric vehicles affordable for mainstream buyers sooner is through government subsidies.

In the emerging markets, over half of auto executives expect China and India to increase investment in their own auto industry with China’s auto market expected to become the most overbuilt emerging market in the next five years. A third of auto executives believe that the solution to overcapacity is industry consolidation through joint ventures and to increase exports to existing and new markets.

Mike Steventon, said: “From a market perspective, the rise of economies such as China and India is creating a new competitive world order. In many ways there is a two-tier global market in play. The more mature countries are struggling to cope with the problem of congestion and changing vehicle needs, while in up-and-coming regions there is a push to deliver low-cost cars to populations eager for greater mobility.”

The report revealed that over 80 percent of respondents expect Chinese auto brands to increase global market share by 2015 and almost three-quarters expect China to be most acquisitive in the automotive industry by 2015. Two in five respondents expect Chinese cars to break into other markets in two to five years and the majority of respondents believe China to lead as the world’s largest car market by auto sales volume and production in five years time.

Source: KPMG

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