ACROFAN

China sees increased demand for personal vehicles and commitment to new energy vehicles, finds KPMG report

Published : Wednesday, June 24, 2020, 2:15 pm
ACROFAN=PRNasia | hkcs@prnasia.com | SNS

Increasing localisation amid pandemic accelerates the end of traditional global market model

HONG KONG, June 24, 2020 /PRNewswire/ -- The automotive industry in mainland China has seen an increase in demand for personal vehicles, and an extension in subsidies for electric vehicles, in part due to the ongoing COVID-19 pandemic, according to KPMG analysis. In addition, the sector is expected to see a shift globally as automotive companies look to establish independent regional strategies for their customers and markets, including for different technologies, markets and applications.

In its 21st edition, KPMG's Global Automotive Executive Survey analysed views from more than 1,100 executives in the automotive and technology industries and over 2,000 consumers from 30 countries. More than one-quarter (27%) of executives surveyed are based in North America, while 23% are based in China, 22% in Western Europe, and the remainder are from Japan and South Korea (8%), India and the ASEAN region (7%), Eastern Europe (5%), South America (4%) and the rest of the world (4%).

Norbert Meyring, Partner, Head of Automotive, KPMG China, says: "Automobile manufacturers active in or based in in mainland China felt the economic consequences of the pandemic early on, however the recovery has proven to be faster than in other regions. For mainland China, some of the aftershocks are still being felt as different components of their value chains are restarting, or in some cases, shutting down again. This unpredictability should be accounted for in planning scenarios. Capturing the time delay within supply and demand chains is now required, especially for those companies with exposure beyond mainland China."

COVID-19 has had a mixed impact on the sector, both globally and in mainland China. "Customers in mainland China are effectively weighing the cost-benefit of new vehicle purchases. While demand is rebounding, the landscape may be different during the recovery phase. Entry-level economy passenger vehicles are the hardest hit, while luxury brands continue to out-perform," adds Luther Kang, Partner, Global Strategy Group, KPMG China. "The consideration for purchasing a vehicle in mainland China extends beyond economic considerations, such as license plate availability, the cost of a parking space, and traffic density factors, as well as decisions regarding public versus private transit. Manufacturers should position themselves to intensify their customer relationships, including direct consumer sales and developing flexible contracting and financing for new vehicles, as well as services which enhance the ownership experience."

Additionally, for the first time in the 21-year history of this survey, KPMG expects that globally within the next 10 years internal combustion engine (ICE) cars will continue to lose market share. ICE vehicles, battery electric vehicles, fuel cell electric vehicles and plug-in hybrid cars will co-exist. Meanwhile, an extension in subsidies for electric vehicles in mainland China confirms ongoing commitment in this market to convert to new energy vehicles.

Meanwhile, online sales and marketing promotional activities are gaining popularity amongst automotive customers in mainland China, including increased interactions via social media platforms and online showrooms. When asked which vehicle segments are most likely to see online purchasing, 85% of China-based respondents indicated they would be open to making some vehicle purchases online, slightly higher than the global average (80%) and other large markets, while only 15% respondents from mainland China said they would not buy a car online.

Looking ahead, global vehicle production and sales are anticipated to pick up in the third quarter in 2020 according to KPMG analysis, but will depend on the region and COVID-19 recovery rates. "Based on our analysis, we expect the COVID-19 crisis will drive fundamental changes in consumer demand in mainland China. Companies should focus on managing customer relationships, digital demand and providing flexible offers with low up-front costs, in order to counteract consumer uncertainties and total cost of ownership (TCO)-driven purchases," Meyring concludes.

About KPMG China

KPMG member firms and its affiliates operating in mainland China, Hong Kong and Macau are collectively referred to as "KPMG China". KPMG China is based in 26 offices across 24 cities with around 12,000 partners and staff in Beijing, Changsha, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Haikou, Hangzhou, Jinan, Nanjing, Ningbo, Qingdao, Shanghai, Shenyang, Shenzhen, Suzhou, Tianjin, Wuhan, Xiamen, Xi'an, Zhengzhou, Hong Kong SAR and Macau SAR. Working collaboratively across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located.

KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 147 countries and territories and have more than 219,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such. In 1992, KPMG became the first international accounting network to be granted a joint venture licence in mainland China. KPMG was also the first among the Big Four in mainland China to convert from a joint venture to a special general partnership, as of 1 August 2012. Additionally, the Hong Kong firm can trace its origins to 1945. This early commitment to this market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in KPMG's appointment for multidisciplinary services (including audit, tax and advisory) by some of China's most prestigious companies.



Copyright © acrofan All Right Reserved


    Acrofan     |     Contact Us : guide@acrofan.com     |     Contents API : RSS

Copyright © Acrofan All Right Reserved