KPMG: The Chinese are coming, and they want market share

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From KMPG:

Nine of the top twenty global automotive manufacturers expected to increase global market share by 2016 come from China, according to KPMG’s annual Global Automotive Executive Survey. Chinese auto companies such as Geely, SAIC and Chery are focusing their sights on the global car market with vehicles that are becoming technologically competitive.

“The survey indicates huge potential for both domestic and international auto manufacturers in China,” comments Andrew Thomson, Co-Head of Automotive, KPMG. He notes the key drivers of success in China include the Government’s ambitious plans for new energy vehicles and increased levels of disposable income.

China is also set to be the main target for alliances or mergers and acquisitions, with 70 percent of global automotive manufacturers expecting increased activity in this region, followed by Eastern Europe and Russia.

Thomson believes increased cooperation between Chinese automakers and their joint venture partners will be critical to achieve mutual strategic interests. With recently announced changes to investment policy in China, he said foreign OEMs will become more reliant on their JV partners for market access and development, while Chinese OEMs have increasing aspirations to expand overseas.

However, the survey points out that this market also poses some challenges, specifically, overcapacity and excess production. Over half of the respondents surveyed believe China’s automotive market will be the most overbuilt BRIC (Brazil, Russia, India and China) market in 2016.

Fuel efficiency is still considered the most important factor affecting consumer-buying decisions among 76 percent of survey respondents, followed this year by environmental friendliness (65 percent). While two-thirds of respondents don’t expect electric vehicles to exceed 15 percent of annual global sales within the next 15 years, survey findings revealed electromobility is expected to take hold sooner in high-growth markets such as China and Japan.